Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2023, 584-728 [2021-28317]
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Parts 144, 147, 153, 155, 156
and 158
[CMS–9911–P]
RIN 0938–AU65
Patient Protection and Affordable Care
Act; HHS Notice of Benefit and
Payment Parameters for 2023
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
This proposed rule includes
proposed payment parameters and
provisions related to the risk adjustment
and risk adjustment data validation
programs, as well as proposed 2023 user
fee rates for issuers offering qualified
health plans (QHPs) through federallyfacilitated Exchanges and State-based
Exchanges on the Federal platform. This
proposed rule also proposes
requirements related to prohibiting
discrimination based on sexual
orientation and gender identity;
guaranteed availability; the offering of
QHP standardized options through
Exchanges on the Federal platform;
requirements for agents, brokers, webbrokers, and issuers assisting consumers
with enrollment through Exchanges that
use the Federal platform; verification
standards related to employer sponsored
coverage; Exchange eligibility
determinations during a benefit year;
special enrollment period verification;
cost-sharing requirements; Essential
Health Benefits (EHBs); Actuarial Value
(AV); QHP issuer quality improvement
strategies; accounting for quality
improvement activity (QIA) expenses
and provider incentives for medical loss
ratio (MLR) reporting and rebate
calculation purposes; re-enrollment, and
requirements related to a new State
Exchange improper payment
measurement program. This proposed
rule also seeks comment on how HHS
can advance health equity through QHP
certification standards and otherwise in
the individual and group health
insurance markets, and how HHS might
address plan choice overload in the
Exchanges.
SUMMARY:
To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on January 27, 2022.
ADDRESSES: In commenting, please refer
to file code CMS–9911–P.
You may submit comments in one of
three ways (please choose only one of
the ways listed):
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1. Electronically. You may submit
electronic comments on this regulation
to https://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.
2. By regular mail. You may mail
written comments to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–9911–P, P.O. Box 8016, Baltimore,
MD 21244–8016.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–9911–P, Mail
Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Jeff Wu, (301) 492–4305, Rogelyn
McLean, (301) 492–4229, Grace Bristol,
(410) 786–8437, Sara Rosta, (301) 492–
4223, or Kaye Wells, (301) 492–4301, for
general information.
Cam Moultrie Clemmons, (206) 615–
2338, or Anthony Galace, (301) 492–
4400, for matters related to past-due
premiums.
Allison Yadsko, (410) 786–1740, John
Barfield, (301) 492–4433, or Jacqueline
Wilson, (301) 492–4286 for matters
related to risk adjustment or risk
adjustment data validation (HHS–
RADV).
Aaron Franz, (410) 786- 8027, or John
Barfield, (301) 492–4433, for matters
related to federally-facilitated Exchange
(FFE) and State-based Exchange on the
Federal platform (SBE–FP) user fees.
Nora Simmons, (410) 786–1981, for
matters related to advance payment of
the premium tax credit (APTC)
proration.
Aaron Franz, (410) 786- 8027, or
Hi’ilei Haru, 301–492–4363, for matters
related to cost-sharing reduction
reconciliation.
Josh Van Drei, (410) 786–1659, for
matters related to actuarial value (AV).
Becca Bucchieri, (301) 492–4341, for
matters related to essential health
benefit (EHB)-benchmark plans and
defrayal of state-required benefits.
Marisa Beatley, (301) 492–4307, for
matters related to employer sponsored
coverage verification.
Susan Kalmus, (301) 492–4275, for
matters related to agent, broker, and
web-broker guidelines. Dena Nelson,
240–401–3535, or Carly Rhyne, 301–
492–4188, for matters related to income
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calculation for eligibility for advance
payments of premium tax credits.
Katherine Bentley, (301) 492–5209, or
Ariel Kennedy, (301) 492–4306, for
matters related to special enrollment
period verification.
Leigha Basini, (301) 492–4380, for
matters related to nondiscrimination
based on sexual orientation and gender
identity; and EHB nondiscrimination.
Christina Whitefield, (301) 492–4172,
for matters related to the medical loss
ratio (MLR) program.
Nidhi Singh Shah, (301) 492–5110, for
matters related to quality improvement
strategy standards for Exchanges.
Erika Ourisman, (301) 492–4170, for
matters related to downstream and
delegated entities.
Nikolas Berkobien, (301) 492–4400, or
Leigha Basini, (301) 492–4380 for
matters related to standardized options.
Erika Melman, (301) 492–4348,
Deborah Hunter, (443) 386–3651, or
Whitney Allen, (667) 290–8748, for
matters related to network adequacy and
essential community providers.
Linus Bicker, (803) 931–6185, for
matters related to State Exchange
improper payment measurement.
Phuong Van, (202) 570–5594, for
matters related to advancing health
equity through qualified health plans
(QHPs).
Angelica Torres-Reid, (410) 786–1721,
and Robert Yates, (301) 492–5151, for
matters related to State Exchange
general program integrity and oversight
requirements.
Zarah Ghiasuddin, (301) 492–4308,
for matters related to re-enrollment in
the Exchanges.
SUPPLEMENTARY INFORMATION: Inspection
of Public Comments: All comments
received before the close of the
comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post comments received
before the close of the comment period
on the following website as soon as
possible after they have been received:
https://www.regulations.gov. Follow the
search instructions on that website to
view public comments. CMS will not
post on Regulations.gov public
comments that make threats to
individuals or institutions or suggest
that the individual will take actions to
harm the individual. CMS continues to
encourage individuals not to submit
duplicative comments. We will post
acceptable comments from multiple
unique commenters even if the content
is identical or nearly identical to other
comments.
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Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Stakeholder Consultation and Input
C. Structure of Proposed Rule
III. Provisions of the Proposed HHS Notice of
Benefit and Payment Parameters for 2023
A. Part 144—Requirements Relating to
Health Insurance Coverage
B. Part 147—Health Insurance Reform
Requirements for the Group and
Individual Health Insurance Markets
C. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment
D. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
E. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
F. Part 158—Issuer Use of Premium
Revenue: Reporting and Rebate
Requirements
G. Solicitation of Comments Regarding
Health Equity and Qualified Health
Plans
IV. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding State Flexibility for Risk
Adjustment (§ 153.320)
C. ICRs Regarding Distributed Data and
Risk Adjustment Data Submission
Requirements (§§ 153.610, 153.700, and
153.710)
D. ICRs Regarding Ability of States To
Permit Agents and Brokers and Webbrokers To Assist Qualified Individuals,
Qualified Employers, or Qualified
Employees Enrolling in QHPs (§ 155.220)
E. ICRs Regarding Verification of Eligibility
for Special Enrollment Periods
(§ 155.420)
F. ICRs Regarding General Program
Integrity and Oversight Requirements
(§ 155.1200)
G. ICRs Regarding State Exchange
Improper Payment Measurement
program (§§ 155.1500–155.1540)
H. ICRs Regarding State Selection of EHBBenchmark Plan for Plan Years
Beginning on or After January 1, 2020
(§ 156.111)
I. ICR Regarding Differential Display of
Standardized Options on the websites of
Web-Brokers (§ 155.220) and QHP
Issuers (§ 156.265)
J. ICRs Regarding Network Adequacy and
Essential Community Providers
(§§ 156.230 and 156.235)
K. ICRs Regarding Payment for CostSharing Reductions (§ 156.430)
L. ICRs Regarding Quality Improvement
Strategy (§ 156.1130)
M. ICRs Regarding Medical Loss Ratio
(§§ 158.140, 158.150, 158.170)
O. Summary of Annual Burden Estimates
for Proposed Requirements
P. Submission of PRA-related Comments
V. Response to Comments
VI. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
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C. Impact Estimates of the Payment Notice
Provisions and Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act
F. Unfunded Mandates
G. Federalism
I. Executive Summary
American Health Benefit Exchanges,
or ‘‘Exchanges,’’ are entities established
under the Patient Protection and
Affordable Care Act (ACA) 1 through
which qualified individuals and
qualified employers can purchase health
insurance coverage in qualified health
plans (QHPs). Many individuals who
enroll in QHPs through individual
market Exchanges are eligible to receive
a premium tax credit (PTC) to reduce
their costs for health insurance
premiums and to receive reductions in
required cost-sharing payments to
reduce out-of-pocket expenses for health
care services. The ACA also established
the risk adjustment program, which
transfers funds from issuers that attract
lower-than-average risk populations to
issuers that attract higher-than-average
risk populations to reduce incentives for
issuers to avoid higher-risk enrollees.
In previous rulemakings, we
established provisions and parameters
to implement many ACA requirements
and programs. In this proposed rule, we
propose to amend some of these
provisions and parameters, with a focus
on maintaining a stable regulatory
environment. These proposed changes
are intended to provide issuers with
greater predictability for upcoming plan
years (PYs), while simultaneously
enhancing the role of states in these
programs. The proposals would provide
states with additional flexibilities,
reduce unnecessary regulatory burdens
on stakeholders, empower consumers,
ensure program integrity, and improve
affordability.
On January 20, 2021, the President
issued an Executive Order which stated
the Administration’s policy on
preventing and combating
discrimination on the basis of gender
identity and sexual orientation.2 This
Executive Order instructed the Secretary
of Health and Human Services
(Secretary of HHS, or HHS Secretary) to
1 The Patient Protection and Affordable Care Act
(Pub. L. 111–148) was enacted on March 23, 2010.
The Healthcare and Education Reconciliation Act of
2010 (Pub. L. 111–152), which amended and
revised several provisions of the Patient Protection
and Affordable Care Act, was enacted on March 30,
2010. In this rulemaking, the two statutes are
referred to collectively as the ‘‘Patient Protection
and Affordable Care Act’’, ‘‘Affordable Care Act’’,
or ‘‘ACA.’’
2 Executive Order 13988 on Preventing and
Combating Discrimination on the Basis of Gender
Identity or Sexual Orientation, January 20, 2021, see
86 FR 7023.
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review all existing regulations, guidance
documents, and other agency actions to
determine whether they are consistent
with the aforementioned policy, and to
consider whether to suspend, revise, or
rescind any agency actions that are
inconsistent with it. In consideration of
this Executive Order, and as a result of
our review of certain regulations, we
propose to amend HHS regulations such
that Exchanges, issuers, and agents and
brokers are prohibited from
discriminating based on sexual
orientation and gender identity. The
provisions in this proposed rule reflect
the aspects of the Executive Order
13988 and aligns with the HHS’ Notice,
released on May 10, 2021, that HHS
interprets and enforces section 1557’s
and Title IX’s prohibition on
discrimination on the basis of sex to
include: (1) Discrimination on the basis
of sexual orientation; and (2)
discrimination on the basis of gender
identity, based on the Supreme Court’s
decision in Bostock v. Clayton County.3
Risk adjustment continues to be a core
program in the individual, small group,
and merged markets both on and off
Exchanges, and we propose recalibrated
parameters for the HHS-operated risk
adjustment methodology. We published
a technical paper, the 2021 HHSOperated Risk Adjustment Technical
Paper on Possible Model Changes 4 in
October 2021, and sought comment on
potential updates to the risk adjustment
models. Consistent with the model
changes discussed in the October 2021
Risk Adjustment (RA) Technical Paper,
in this rule, we propose the following
three updates to the HHS risk
adjustment models beginning with the
2023 benefit year: (1) Adding a twostage weighted approach to the adult
and child models; (2) removing the
current severity illness factors from the
adult models and adding an interacted
hierarchical condition category (HCC)
count model specification to the adult
and child models; and (3) replacing the
current enrollment duration factors in
the adult models with HCC-contingent
enrollment duration factors. These
proposals are intended to improve
prediction in the adult and child risk
adjustment models for the lowest-risk
enrollees, the highest-risk enrollees, and
partial-year enrollees, whose plan
liabilities are underpredicted in the
3 U.S. Dep’t of Health & Hum. Servs., Notification
of Interpretation and Enforcement of Section 1557
of the Affordable Care Act and Title IX of the
Education Amendments of 1972, 86 FR 27984 (May
25, 2021). Also see, Bostock v. Clayton County, 140
S. Ct. 1731 (2020). https://www.supremecourt.gov/
opinions/19pdf/17-1618_hfci.pdf.
4 Available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
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current models. We also propose to
recalibrate the 2023 benefit year risk
adjustment models using the 2017,
2018, and 2019 enrollee-level External
Data Gathering Environment (EDGE)
data. We further propose to continue
applying a market pricing adjustment to
the plan liability associated with
Hepatitis C drugs in the risk adjustment
models, consistent with the approach
adopted beginning with the 2020
models. We discuss our consideration of
the targeted removal of the mapping of
hydroxychloroquine sulfate to Immune
Suppressants and Immunomodulators
(RXC 09) in the 2018 and 2019 benefit
year enrollee-level EDGE data used for
the 2023 benefit year model
recalibration,5 as well as the targeted
removal of Descovy® from mapping to
Anti-HIV Agents (RXC 01) in all three
benefit years’ enrollee-level EDGE
datasets used for the 2023 benefit year
model recalibration. We also propose for
the 2024 benefit year and beyond to
recalibrate the adult models using the
final, fourth quarter (Q4) RXC mapping
document that was applicable for each
benefit year of data that is included in
the current year’s model recalibration.
We propose to begin to use this
approach for recalibration of the 2023
adult risk adjustment models, with the
exception of the 2017 enrollee-level
EDGE data year, for which we propose
to use the most recent RXC mapping
document that was available when we
first processed the 2017 enrollee-level
EDGE data (that is, Q2 2018).
Additionally, we propose to repeal
the ability of states to request a
reduction in risk adjustment state
transfers starting with the 2024 benefit
year, while proposing to provide an
exception for states that previously
requested a reduction to transfers under
§ 153.320(d). In addition, we solicit
comments on the requests from
Alabama to reduce risk adjustment state
transfers for the 2023 benefit year in the
individual (including the catastrophic
and non-catastrophic risk pools) and
small group markets.
We also propose the 2023 benefit year
risk adjustment user fee for states where
HHS operates the risk adjustment
program. We also propose to collect and
extract five new data elements including
ZIP code, race, ethnicity, individual
coverage health reimbursement
arrangement (ICHRA) indicator, and a
subsidy indicator as part of the required
risk adjustment data that issuers must
make accessible to HHS in states where
5 The
same concern was not present for the 2016
or 2017 enrollee-level EDGE data because
hydroxychloroquine was not included in the
crosswalk until 2018.
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HHS is operating the risk adjustment
program. We also propose to extract
three new data elements issuers already
provide to HHS as part of the required
risk adjustment data submissions (plan
ID, rating area, and subscriber indicator)
and to expand the permitted uses of the
risk adjustment data and reports.
Finally, we propose that whenever HHS
recoups high-cost risk pool funds as a
result of audits of risk adjustment
covered plans, actionable discrepancies,
or successful appeals, the recouped
funds would be used to reduce high-cost
risk pool charges for that national highcost risk pool for the next applicable
benefit year for which high-cost risk
pool payments have not already been
calculated.
We propose further refinements to the
HHS–RADV error estimation
methodology beginning with the 2021
benefit year to (1) extend the application
of Super HCCs (which are currently
based on the coefficient estimation
groups defined in the applicable benefit
year’s ‘‘Additional Adult Variables’’
Table of the ‘‘Do It Yourself (DIY)’’
software (Table 6 in the 2021 Benefit
Year DIY Software), which is published
on the CCIIO website) 6 from their
current application only in the sorting
step that assigns HCCs to failure rate
groups to broader application
throughout the HHS–RADV error rate
calculation process, (2) specify that
Super HCCs will be defined separately
according to the age group model to
which an enrollee is subject, and (3)
constrain to zero any failure rate group
outlier with a negative failure rate,
regardless of whether the outlier issuer
has a negative or positive error rate.
As we do every year in the HHS
notice of benefit and payment
parameters, we propose updated
parameters applicable in the individual
and small group markets. We propose
the PY 2023 user fee rates for issuers
offering plans through the Exchanges
using the Federal platform. We propose
maintaining the Federal-facilitated
Exchange (FFE) and State-based
Exchange on the Federal platform (SBE–
FP) user fees at the current PY 2022
rates, 2.75 and 2.25 percent of total
monthly premiums, respectively, in
order to preserve and ensure that the
FFEs and Federal platform have
sufficient funding to cover the cost of all
special benefits provided to FFE and
SBE–FP issuers during PY 2023. We
also note that HHS will issue the 2023
benefit year premium adjustment
6 https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance. The August 3, 2021
version of the 2021 DIY Software Tables is available
at https://www.cms.gov/files/document/cy2021-diytables-07092021.xlsx.
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percentage index and related payment
parameters in guidance, consistent with
the policy finalized in part 2 of the 2022
Payment Notice.
We also propose to require all
Exchanges to prorate premiums and
advance payments of the premium tax
credit (APTC) when administering
APTC for enrollees enrolled in a
particular policy for less than the full
coverage month, including when the
enrollee is enrolled in multiple policies
within a month, each lasting less than
the full coverage month.
We are proposing changes to clarify
that the cost-sharing reduction (CSR)
data submission process is mandatory
only for those issuers that received CSR
payments from HHS for any part of the
benefit year, and voluntary for other
issuers. We propose a technical
correction to the definition of large
group market in § 144.103 to delete the
concluding phrase ‘‘unless otherwise
provided under state law.’’
We propose new display requirements
for web-broker non-Exchange websites,
including requirements related to QHP
comparative information and
standardized disclaimer language; a
prohibition on displaying QHP
advertisements or otherwise providing
favored or preferred display of QHPs
based on compensation agents, brokers,
or web-brokers receive from QHP
issuers; and a requirement to
prominently display a clear explanation
of the rationale for explicit QHP
recommendations and the methodology
for the default display of QHPs on webbroker non-Exchange websites to better
inform and protect consumers using
such websites.
We propose a number of policies to
address certain agent, broker, and webbroker practices. These policies would
be added as part of the FFE standards
of conduct codified at § 155.220(j)(2),
improving CMS’s ability to enforce
existing responsibilities agents, brokers,
and web-brokers utilizing the Exchange
are required to adhere to without
substantially burdening other agents,
brokers, and web-brokers, while also
providing more detail about specific
business practices that are prohibited.
We believe the proposed new regulatory
text would protect consumers, ensure
the efficient operation of the Exchange,
minimize the risk of future tax
discrepancies, reduce unauthorized
enrollments in Exchange coverage, and
provide a stronger basis for CMS to take
enforcement action against agents,
brokers, and web-brokers for violations
of these requirements.
We propose revising our
interpretation of the guaranteed
availability requirement to prohibit
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issuers from applying a premium
payment to an individual’s or
employer’s past debt owed for coverage
and refusing to effectuate enrollment in
new coverage. We believe this proposal
would have a positive impact on the
risk pool by removing barriers to
enrollment for low-income individuals
who lost prior coverage due to
nonpayment of premiums. In addition,
this proposal would promote more
equitable access to health insurance
coverage by ensuring that enrollment is
not delayed as a result of non-payment
of past-due premiums to the same issuer
or control group, regardless of an
individual’s or employee’s status as an
APTC recipient.
Stable and affordable Exchanges with
healthy risk pools are necessary for
ensuring consumers maintain stable
access to health insurance options. In
order to minimize the potential for
adverse selection in the Exchanges, we
propose to allow Exchanges to conduct
risk-based employer sponsored coverage
verification.
We propose to clarify that only those
provider incentives and bonuses that are
tied to clearly defined, objectively
measurable, and well-documented
clinical or quality improvement
standards that apply to providers may
be included in incurred claims for MLR
reporting and rebate calculation
purposes. We also propose to specify
that only expenses directly related to
activities that improve health care
quality may be included as quality
improvement activity (QIA) expenses
for MLR reporting and rebate
calculation purposes.
In addition, we propose to make a
technical amendment to remove a
reference to a provision that was
vacated by the United States District
Court for the District of Maryland in
City of Columbus, et al. v. Cochran, 523
F. Supp. 3d 731 (D. Md. 2021), and thus
deleted in part 2 of the 2022 Payment
Notice final rule.
With regards to the essential health
benefits (EHB), we propose an evergreen
deadline for EHB-benchmark plan
applications by states, as well as
proposing to remove the ability for
states to permit issuers to substitute
benefits between EHB categories. In
addition, we propose changed de
minimis thresholds for the actuarial
value (AV) for plans subject to EHB
requirements, as well as narrower de
minimis thresholds for individual
market silver QHPs and income-based
CSR plan variations. We also propose to
remove the state annual reporting
requirement to report state-required
benefits in addition to the EHB to HHS.
We believe there may be ways to
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achieve compliance with the defrayal
policy without imposing the rigid
submission requirements on states that
exist under the annual reporting
requirement.
We propose policies to strengthen and
clarify our network adequacy standards,
including expanding the provider
specialty list for time and distance
standards and adding appointment wait
time standards. For plans with tiered
networks, we propose that, to count
toward the issuer’s satisfaction of the
network adequacy and essential
community provider (ECP) standards,
providers must be contracted within the
network tier that results in the lowest
cost-sharing obligation. We also propose
to require issuers to submit information
about whether providers offer telehealth
services. We propose to increase the
ECP threshold from 20 percent to 35
percent.
We also propose to amend the current
regulation, which provides that,
notwithstanding any relationship or
relationships a QHP issuer may have
with delegated or downstream entities,
the QHP issuer maintains responsibility
for its compliance and the compliance
of any of its delegated or downstream
entities with all applicable Federal
standards related to Exchanges.
Specifically, HHS proposes adding a
requirement that all agreements between
QHP issuers and their downstream and
delegated entities include language
stating that any Exchange authority,
including State Exchanges, may demand
and receive records related to the QHP
issuers’ obligations and compliance
with applicable Federal standards
related to Exchanges. We also propose
other amendments to extend the
obligation to oversee compliance of
delegated and downstream entities to
QHP issuers in all models of Exchange.
These proposals would hold QHP
issuers in all models of Exchange
responsible for their downstream and
delegated entities’ adherence to
applicable Federal standards, and make
their oversight obligations, and the
obligations of their downstream and
delegated entities, explicit. We also
propose to amend the title of subpart D
of 45 CFR part 156 from ‘‘Standards for
Qualified Health Plan Issuers on
Federally Facilitated Exchanges and
State-Based Exchanges on the Federal
platform’’ to ‘‘Standards for Qualified
Health Plan Issuers on Specific Types of
Exchanges’’ to more accurately reflect
the applicability of the regulations
within the subpart.
We solicit comments on incorporating
the net premium, maximum out-ofpocket (MOOP), deductible, and annual
out-of-pocket costs (OOPC) of a plan
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587
into the Exchange re-enrollment
hierarchy as well as additional criteria
or mechanisms HHS could consider to
ensure the Exchange hierarchy for reenrollment aligns with plan generosity
and consumer needs, such as, reenrolling a current bronze QHP enrollee
into an available silver QHP with a
lower net premium and higher plan
generosity offered by the same QHP
issuer. We also propose to update the
quality improvement strategy (QIS)
standards to require QHP issuers to
address health and health care
disparities as a specific topic area
within their QIS beginning in 2023.
We also propose to require issuers of
QHPs in FFEs and SBE–FPs to offer
through the Exchange standardized QHP
options beginning in PY 2023.
Finally, we solicit comments
regarding additional ways HHS could
incentivize QHP issuers to design plans
that improve health equity and health
conditions in enrollees’ environments,
as well as how QHP issuers could
address other social determinants of
health (SDOH) outside of the QHP
certification process.
II. Background
A. Legislative and Regulatory Overview
Title I of the Health Insurance
Portability and Accountability Act of
1996 (HIPAA) added a new title XXVII
to the Public Health Service Act (PHS
Act) to establish various reforms to the
group and individual health insurance
markets.
These provisions of the PHS Act were
later augmented by other laws,
including the ACA. Subtitles A and C of
title I of the ACA reorganized, amended,
and added to the provisions of part A of
title XXVII of the PHS Act relating to
group health plans and health insurance
issuers in the group and individual
markets. The term ‘‘group health plan’’
includes both insured and self-insured
group health plans.7
Section 2702 of the PHS Act, as added
by the ACA, establishes requirements
for guaranteed availability of coverage
in the group and individual markets.
Section 2718 of the PHS Act, as added
by the ACA, generally requires health
insurance issuers to submit an annual
MLR report to HHS, and provide rebates
to enrollees if the issuers do not achieve
specified MLR thresholds.
Section 2791 of the PHS Act defines
several terms, including ‘‘large group
market’’.
7 The term ‘‘group health plan’’ is used in title
XXVII of the PHS Act and is distinct from the term
‘‘health plan’’ as used in other provisions of title I
of ACA. The term ‘‘health plan’’ does not include
self-insured group health plans.
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Section 1301(a)(1)(B) of the ACA
directs all issuers of QHPs to cover the
EHB package described in section
1302(a) of the ACA, including coverage
of the services described in section
1302(b) of the ACA, adherence to the
cost-sharing limits described in section
1302(c) of the ACA, and meeting the AV
levels established in section 1302(d) of
the ACA. Section 2707(a) of the PHS
Act, which is effective for plan or policy
years beginning on or after January 1,
2014, extends the requirement to cover
the EHB package to non-grandfathered
individual and small group health
insurance coverage, irrespective of
whether such coverage is offered
through an Exchange. In addition,
section 2707(b) of the PHS Act directs
non-grandfathered group health plans to
ensure that cost sharing under the plan
does not exceed the limitations
described in sections 1302(c)(1) of the
ACA.
Section 1302 of the ACA provides for
the establishment of an EHB package
that includes coverage of EHBs (as
defined by the Secretary of HHS), costsharing limits, and AV requirements.
The law directs that EHBs be equal in
scope to the benefits provided under a
typical employer plan, and that they
cover at least the following 10 general
categories: Ambulatory patient services;
emergency services; hospitalization;
maternity and newborn care; mental
health and substance use disorder
services, including behavioral health
treatment; prescription drugs;
rehabilitative and habilitative services
and devices; laboratory services;
preventive and wellness services and
chronic disease management; and
pediatric services, including oral and
vision care. Section 1302(d) of the ACA
describes the various levels of coverage
based on their AV. Consistent with
section 1302(d)(2)(A) of the ACA, AV is
calculated based on the provision of
EHB to a standard population. Section
1302(d)(3) of the ACA directs the
Secretary of HHS to develop guidelines
that allow for de minimis variation in
AV calculations. Sections 1302(b)(4)(A)
through (D) establish that the Secretary
must define EHB in a manner that: (1)
Reflects appropriate balance among the
10 categories; (2) is not designed in such
a way as to discriminate based on age,
disability, or expected length of life; (3)
takes into account the health care needs
of diverse segments of the population;
and (4) does not allow denials of EHBs
based on age, life expectancy, disability,
degree of medical dependency, or
quality of life.
Section 1311(c) of the ACA provides
the Secretary the authority to issue
regulations to establish criteria for the
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certification of QHPs. Section
1311(c)(1)(B) of the ACA requires among
the criteria for certification that the
Secretary must establish by regulation
that QHPs ensure a sufficient choice of
providers. Section 1311(e)(1) of the ACA
grants the Exchange the authority to
certify a health plan as a QHP if the
health plan meets the Secretary’s
requirements for certification issued
under section 1311(c) of the ACA, and
the Exchange determines that making
the plan available through the Exchange
is in the interests of qualified
individuals and qualified employers in
the state. Section 1311(c)(6)(C) of the
ACA establishes special enrollment
periods and section 1311(c)(6)(D) of the
ACA establishes the monthly
enrollment period for Indians, as
defined by section 4 of the Indian
Health Care Improvement Act.8
Section 1311(c)(1)(E) of the ACA
specifies that to be certified as a QHP,
each health plan must implement a QIS,
which is described in section 1311(g)(1)
of the ACA. Section 1311(g)(1) of the
ACA describes this strategy as a
payment structure that provides
increased reimbursement or other
incentives to improve health outcomes
of plan enrollees, to prevent hospital
readmissions, improve patient safety
and reduce medical errors, promote
wellness and health, and reduce health
and health care disparities.
Section 1311(d)(3)(B) of the ACA
permits a state, at its option, to require
QHPs to cover benefits in addition to
EHB. This section also requires a state
to make payments, either to the
individual enrollee or to the issuer on
behalf of the enrollee, to defray the cost
of these additional state-required
benefits.
Section 1312(c) of the ACA generally
requires a health insurance issuer to
consider all enrollees in all health plans
(except grandfathered health plans)
offered by such issuer to be members of
a single risk pool for each of its
individual and small group markets.
States have the option to merge the
individual and small group market risk
pools under section 1312(c)(3) of the
ACA.
Section 1312(e) of the ACA provides
the Secretary with the authority to
establish procedures under which a
state may allow agents or brokers to (1)
enroll qualified individuals and
qualified employers in qualified health
8 The Indian Health Care Improvement Act
(IHCIA), the cornerstone legal authority for the
provision of health care to American Indians and
Alaska Natives, was made permanent when
President Obama signed the bill on March 23, 2010,
as part of the Patient Protection and Affordable Care
Act.
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plans offered through Exchanges and (2)
assist individuals in applying for PTC
and CSRs for qualified health plans sold
through an Exchange.
Sections 1313 and 1321 of the ACA
provide the Secretary with the authority
to oversee the financial integrity of State
Exchanges, their compliance with HHS
standards, and the efficient and nondiscriminatory administration of State
Exchange activities. Section
1313(a)(5)(A) of the ACA provides the
Secretary with the authority to
implement any measure or procedure
that the Secretary determines is
appropriate to reduce fraud and abuse
in the administration of the Exchanges.
Section 1321 of the ACA provides for
state flexibility in the operation and
enforcement of Exchanges and related
requirements.
Section 1321(a) of the ACA provides
broad authority for the Secretary to
establish standards and regulations to
implement the statutory requirements
related to Exchanges, QHPs and other
components of title I of the ACA,
including such other requirements as
the Secretary determines appropriate.
When operating an FFE under section
1321(c)(1) of the ACA, HHS has the
authority under sections 1321(c)(1) and
1311(d)(5)(A) of the ACA to collect and
spend user fees. Office of Management
and Budget (OMB) Circular A–25
Revised establishes Federal policy
regarding user fees and specifies that a
user charge will be assessed against
each identifiable recipient for special
benefits derived from federal activities
beyond those received by the general
public.
Section 1321(d) of the ACA provides
that nothing in title I of the ACA must
be construed to preempt any state law
that does not prevent the application of
title I of the ACA. Section 1311(k) of the
ACA specifies that Exchanges may not
establish rules that conflict with or
prevent the application of regulations
issued by the Secretary.
Section 1343 of the ACA establishes
a permanent risk adjustment program to
provide payments to health insurance
issuers that attract higher-than-average
risk populations, such as those with
chronic conditions, funded by payments
from those that attract lower-thanaverage risk populations, thereby
reducing incentives for issuers to avoid
higher-risk enrollees.
Section 1401(a) of the ACA amended
the Internal Revenue Code (the Code) to
add Section 36B, which, among other
things, requires that a taxpayer reconcile
APTC for a year of coverage with the
amount of the PTC the taxpayer is
allowed for the year.
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Section 1402 of the ACA provides for,
among other things, reductions in cost
sharing for EHB for qualified low- and
moderate-income enrollees in silver
level qualified health plans offered
through the individual market
Exchanges. This section also provides
for reductions in cost sharing for
Indians enrolled in QHPs at any metal
level.
Section 1411(c) of the ACA requires
the Secretary to submit certain
information provided by applicants
under section 1411(b) of the ACA to
other federal officials for verification,
including income and family size
information to the Secretary of the
Treasury. Section 1411(d) of the ACA
provides that the Secretary must verify
the accuracy of information provided by
applicants under section 1411(b) of the
ACA for which section 1411(c) does not
prescribe a specific verification
procedure, in such manner as the
Secretary determines appropriate.
Section 1411(f) of the ACA requires
the Secretary, in consultation with the
Treasury and Homeland Security
Department Secretaries and the
Commissioner of Social Security, to
establish procedures for hearing and
making decisions governing appeals of
Exchange eligibility determinations.
Section 1411(f)(1)(B) of the ACA
requires the Secretary to establish
procedures to redetermine eligibility on
a periodic basis, in appropriate
circumstances, including eligibility to
purchase a QHP through the Exchange
and for APTC and CSRs.
Section 1411(g) of the ACA allows the
use of applicant information only for the
limited purposes of, and to the extent
necessary to, ensure the efficient
operation of the Exchange, including by
verifying eligibility to enroll through the
Exchange and for APTC and CSRs, and
limits the disclosure of such
information.
Section 1557 of the ACA applies
certain long-standing civil rights
nondiscrimination requirements to ‘‘any
health program or activity, any part of
which is receiving Federal financial
assistance, including credits, subsidies,
or contracts of insurance, or under any
program or activity that is administered
by an Executive agency, or any entity
established under’’ Title I of the ACA
(or amendments). It did so by
referencing statutes that specify
prohibited grounds of discrimination,
namely, race, color, national origin, sex,
age, or disability, in an array of federally
funded and administered programs or
activities.9 In addition, HHS has
previously finalized rules unrelated to
9 42
U.S.C. 18116.
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section 1557 of the ACA to address
populations that have historically been
subject to discrimination.
Section 5000A of the Code, as added
by section 1501(b) of the ACA, requires
individuals to have minimum essential
coverage (MEC) for each month, qualify
for an exemption, or make an individual
shared responsibility payment. Under
the Tax Cuts and Jobs Act, which was
enacted on December 22, 2017, the
individual shared responsibility
payment is reduced to $0, effective for
months beginning after December 31,
2018.10 Notwithstanding that reduction,
certain exemptions are still relevant to
determine whether individuals age 30
and above qualify to enroll in
catastrophic coverage under
§§ 155.305(h) and 156.155(a)(5).
1. Premium Stabilization Programs
In the July 15, 2011 Federal Register
(76 FR 41929), we published a proposed
rule outlining the framework for the
premium stabilization programs.11 We
implemented the premium stabilization
programs in a final rule, published in
the March 23, 2012 Federal Register (77
FR 17219) (Premium Stabilization Rule).
In the December 7, 2012 Federal
Register (77 FR 73117), we published a
proposed rule outlining the benefit and
payment parameters for the 2014 benefit
year to expand the provisions related to
the premium stabilization programs and
set forth payment parameters in those
programs (proposed 2014 Payment
Notice). We published the 2014
Payment Notice final rule in the March
11, 2013 Federal Register (78 FR
15409). In the June 19, 2013 Federal
Register (78 FR 37032), we proposed a
modification to the HHS-operated
methodology related to community
rating states. In the October 30, 2013
Federal Register (78 FR 65046), we
finalized the proposed modification to
the HHS-operated methodology related
to community rating states. We
published a correcting amendment to
the 2014 Payment Notice final rule in
the November 6, 2013 Federal Register
(78 FR 66653) to address how an
enrollee’s age for the risk score
calculation would be determined under
the HHS-operated risk adjustment
methodology.
In the December 2, 2013 Federal
Register (78 FR 72321), we published a
proposed rule outlining the benefit and
payment parameters for the 2015 benefit
year to expand the provisions related to
the premium stabilization programs,
10 Public
Law 115–97, 131 Stat. 2054 (2017).
term premium stabilization programs
refers to the risk adjustment, risk corridors, and
reinsurance programs established by the ACA. See
42 U.S.C. 18061, 18062, and 18063.
11 The
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589
setting forth certain oversight provisions
and establishing the payment
parameters in those programs (proposed
2015 Payment Notice). We published
the 2015 Payment Notice final rule in
the March 11, 2014 Federal Register (79
FR 13743). In the May 27, 2014 Federal
Register (79 FR 30240), the 2015 fiscal
year sequestration rate for the risk
adjustment program was announced.
In the November 26, 2014 Federal
Register (79 FR 70673), we published a
proposed rule outlining the benefit and
payment parameters for the 2016 benefit
year to expand the provisions related to
the premium stabilization programs,
setting forth certain oversight provisions
and establishing the payment
parameters in those programs (proposed
2016 Payment Notice). We published
the 2016 Payment Notice final rule in
the February 27, 2015 Federal Register
(80 FR 10749).
In the December 2, 2015 Federal
Register (80 FR 75487), we published a
proposed rule outlining the benefit and
payment parameters for the 2017 benefit
year to expand the provisions related to
the premium stabilization programs,
setting forth certain oversight provisions
and establishing the payment
parameters in those programs (proposed
2017 Payment Notice). We published
the 2017 Payment Notice final rule in
the March 8, 2016 Federal Register (81
FR 12203).
In the September 6, 2016 Federal
Register (81 FR 61455), we published a
proposed rule outlining the benefit and
payment parameters for the 2018 benefit
year and to further promote stable
premiums in the individual and small
group markets. We proposed updates to
the risk adjustment methodology, new
policies around the use of external data
for recalibration of our risk adjustment
models, and amendments to the HHS–
RADV process (proposed 2018 Payment
Notice). We published the 2018
Payment Notice final rule in the
December 22, 2016 Federal Register (81
FR 94058).
In the November 2, 2017 Federal
Register (82 FR 51042), we published a
proposed rule outlining the benefit and
payment parameters for the 2019 benefit
year, and to further promote stable
premiums in the individual and small
group markets. We proposed updates to
the risk adjustment methodology and
amendments to the HHS–RADV process
(proposed 2019 Payment Notice). We
published the 2019 Payment Notice
final rule in the April 17, 2018 Federal
Register (83 FR 16930). We published a
correction to the 2019 risk adjustment
coefficients in the 2019 Payment Notice
final rule in the May 11, 2018 Federal
Register (83 FR 21925). On July 27,
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2018, consistent with 45 CFR
153.320(b)(1)(i), we updated the 2019
benefit year final risk adjustment model
coefficients to reflect an additional
recalibration related to an update to the
2016 enrollee-level External Data
Gathering Environment (EDGE)
dataset.12
In the July 30, 2018 Federal Register
(83 FR 36456), we published a final rule
that adopted the 2017 benefit year risk
adjustment methodology as established
in the final rules published in the March
23, 2012 (77 FR 17220 through 17252)
and March 8, 2016 editions of the
Federal Register (81 FR 12204 through
12352). That final rule set forth
additional explanation of the rationale
supporting use of statewide average
premium in the HHS-operated risk
adjustment state payment transfer
formula for the 2017 benefit year,
including the reasons why the program
is operated in a budget-neutral manner.
That final rule also permitted HHS to
resume 2017 benefit year risk
adjustment payments and charges. HHS
also provided guidance as to the
operation of the HHS-operated risk
adjustment program for the 2017 benefit
year in light of publication of the final
rule.13
In the August 10, 2018 Federal
Register (83 FR 39644), we published a
proposed rule seeking comment on
adopting the 2018 benefit year risk
adjustment methodology in the final
rules published in the March 23, 2012
(77 FR 17219) and in the December 22,
2016 editions of the Federal Register
(81 FR 94058). The proposed rule set
forth additional explanation of the
rationale supporting use of statewide
average premium in the HHS-operated
risk adjustment state payment transfer
formula for the 2018 benefit year,
including the reasons why the program
is operated in a budget-neutral manner.
In the December 10, 2018 Federal
Register (83 FR 63419), we issued a
final rule adopting the 2018 benefit year
HHS-operated risk adjustment
methodology as established in the final
rules published in the March 23, 2012
(77 FR 17219) and the December 22,
2016 (81 FR 94058) editions of the
Federal Register. That final rule sets
forth additional explanation of the
rationale supporting use of statewide
12 ‘‘Updated 2019 Benefit Year Final HHS Risk
Adjustment Model Coefficients.’’ July 27, 2018.
Available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/2019Updtd-Final-HHS-RA-Model-Coefficients.pdf.
13 ‘‘Update on the HHS-operated Risk Adjustment
Program for the 2017 Benefit Year.’’ July 27, 2018.
Available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/2017-RAFinal-Rule-Resumption-RAOps.pdf.
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average premium in the HHS-operated
risk adjustment state payment transfer
formula for the 2018 benefit year,
including the reasons why the program
is operated in a budget-neutral manner.
In the January 24, 2019 Federal
Register (84 FR 227), we published a
proposed rule outlining updates to the
calibration of the risk adjustment
methodology, the use of EDGE data for
research purposes, and updates to HHS–
RADV audits. We published the 2020
Payment Notice final rule in the April
25, 2019 Federal Register (84 FR
17454).
In the February 6, 2020 Federal
Register (85 FR 7088), we published a
proposed rule that included updates to
the risk adjustment models’ HCCs and a
modification HHS–RADV error rate
calculation methodology. We published
the 2021 Payment Notice final rule in
the May 14, 2020 Federal Register (85
FR 29164).
In the June 2, 2020 Federal Register
(85 FR 33595), we published a proposed
rule that proposed updates to various
aspects of the HHS–RADV
methodologies and processes. We
published a final rule titled, the
Amendments to the HHS-Operated Risk
Adjustment Data Validation Under the
Patient Protection and Affordable Care
Act’s HHS-Operated Risk Adjustment
Program (2020 HHS–RADV
Amendments Rule) in the December 1,
2020 Federal Register (85 FR 76979).
That final rule revised the failure rate
grouping algorithm, finalized a sliding
scale adjustment in HHS–RADV error
rate calculation, and a constraint on risk
score adjustments for low-side failure
rate outliers. The final rule also
established a transition from the
prospective application of HHS–RADV
adjustments to apply HHS–RADV
results to risk scores from the same
benefit year as that being audited.
In the September 2, 2020 Federal
Register (85 FR 54820), HHS issued an
interim final rule containing certain
policy and regulatory revisions in
response to the COVID–19 public health
emergency (PHE), wherein we set forth
risk adjustment reporting requirements
for issuers offering temporary premium
credits in the 2020 benefit year (interim
final rule on COVID–19).
In the January 20, 2021 Federal
Register (86 FR 6138), HHS issued a
final rule containing certain policy and
regulatory revisions related to the risk
adjustment program (hereinafter
referred to as ‘‘part 1 of the 2022
Payment Notice final rule’’). In the May
5, 2021 Federal Register (86 FR 24140),
HHS issued another final rule
containing policy and regulatory
revisions related to the risk adjustment
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program, including approval of the
request from Alabama to reduce risk
adjustment transfers by 50 percent in
the individual and small group markets
for the 2022 benefit year (hereinafter
referred to as ‘‘part 2 of the 2022
Payment Notice final rule’’). In addition,
part 2 of the 2022 Payment Notice final
rule established a revised schedule of
collections for HHS–RADV and updated
the provisions regulating second
validation audit (SVA) and initial
validation audit (IVA) entities.
2. Program Integrity
In the June 19, 2013 Federal Register
(78 FR 37031), we published a proposed
rule that proposed certain program
integrity standards related to Exchanges
and the premium stabilization programs
(proposed Program Integrity Rule). The
provisions of that proposed rule were
finalized in two rules, the ‘‘first Program
Integrity Rule’’ published in the August
30, 2013 Federal Register (78 FR 54069)
and the ‘‘second Program Integrity
Rule’’ published in the October 30, 2013
Federal Register (78 FR 65045).
3. Market Rules
An interim final rule relating to the
HIPAA health insurance reforms was
published in the April 8, 1997 Federal
Register (62 FR 16894). A proposed rule
relating to the 2014 health insurance
market rules was published in the
November 26, 2012 Federal Register (77
FR 70584). A final rule implementing
the health insurance market rules was
published in the February 27, 2013
Federal Register (78 FR 13406) (2014
Market Rules).
A proposed rule relating to Exchanges
and Insurance Market Standards for
2015 and beyond was published in the
March 21, 2014 Federal Register (79 FR
15808) (2015 Market Standards
Proposed Rule). A final rule
implementing the Exchange and
Insurance Market Standards for 2015
and Beyond was published in the May
27, 2014 Federal Register (79 FR 30240)
(2015 Market Standards Rule). The 2018
Payment Notice final rule in the
December 22, 2016 Federal Register (81
FR 94058) provided additional guidance
on guaranteed availability and
guaranteed renewability. In the Market
Stabilization final rule that was
published in the April 18, 2017 Federal
Register (82 FR 18346), we further
interpreted the guaranteed availability
provision. In the 2019 Payment Notice
final rule in the April 17, 2018 Federal
Register (83 FR 17058), we clarified that
certain exceptions to the special
enrollment periods only apply with
respect to coverage offered outside of
the Exchange in the individual market.
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In the Nondiscrimination in Health and
Human Education Programs or
Activities final rule on section 1557 of
the ACA, published in the June 19, 2020
Federal Register (85 FR 37160), we
removed nondiscrimination protections
on the basis of gender identity and
sexual orientation from the guaranteed
availability regulation.
In part 2 of the 2022 Payment Notice
final rule in the May 5, 2021 Federal
Register (86 FR 24140), we made
additional amendments to the
guaranteed availability regulation
regarding special enrollment periods
and finalized new special enrollment
periods related to untimely notice of
triggering events, cessation of employer
contributions or government subsidies
to COBRA continuation coverage, and
loss of APTC eligibility. In the final rule
Updating Payment Parameters, Section
1332 Waiver Implementing Regulations,
and Improving Health Insurance
Markets for 2022 and Beyond published
in the September 27, 2021 Federal
Register (86 FR 53412) (part 3 of the
2022 Payment Notice) by HHS and the
Department of the Treasury, HHS
finalized additional amendments to the
guaranteed availability regulations
regarding special enrollment periods.
4. Exchanges
We published a request for comment
relating to Exchanges in the August 3,
2010 Federal Register (75 FR 45584).
We issued initial guidance to states on
Exchanges on November 18, 2010. We
proposed a rule in the July 15, 2011
Federal Register (76 FR 41865) to
implement components of the
Exchanges, and a rule in the August 17,
2011 Federal Register (76 FR 51201)
regarding Exchange functions in the
individual market and Small Business
Health Options Program (SHOP),
eligibility determinations, and Exchange
standards for employers. A final rule
implementing components of the
Exchanges and setting forth standards
for eligibility for Exchanges, as well as
network adequacy and ECP certification
standards, was published in the March
27, 2012 Federal Register (77 FR 18309)
(Exchange Establishment Rule).
In the 2014 Payment Notice and in the
Amendments to the HHS Notice of
Benefit and Payment Parameters for
2014 interim final rule, published in the
March 11, 2013 Federal Register (78 FR
15541), we set forth standards related to
Exchange user fees. We established an
adjustment to the FFE user fee in the
Coverage of Certain Preventive Services
under the Affordable Care Act final rule,
published in the July 2, 2013 Federal
Register (78 FR 39869) (Preventive
Services Rule).
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In the 2016 Payment Notice, we also
set forth the ECP certification standard
at § 156.235, with revisions in the 2017
Payment Notice in the March 8, 2016
Federal Register (81 FR 12203) and the
2018 Payment Notice in the December
22, 2016 Federal Register (81 FR
94058).
In an interim final rule, published in
the May 11, 2016 Federal Register (81
FR 29146), we made amendments to the
parameters of certain special enrollment
periods (2016 Interim Final Rule). We
finalized these in the 2018 Payment
Notice final rule, published in the
December 22, 2016 Federal Register (81
FR 94058).
In the April 18, 2017 Market
Stabilization final rule Federal Register
(82 FR 18346), we amended standards
relating to special enrollment periods
and QHP certification. In the 2019
Payment Notice final rule, published in
the April 17, 2018 Federal Register (83
FR 16930), we modified parameters
around certain special enrollment
periods. In the April 25, 2019 Federal
Register (84 FR 17454), the final 2020
Payment Notice established a new
special enrollment period.
In the February 6, 2020 Federal
Register (85 FR 7088), we published a
proposed rule (proposal 2021 Payment
Notice). We published the final rule in
the May 14, 2020 Federal Register (85
FR 29164) (2021 Payment Notice).
In the December 4, 2020 Federal
Register (85 FR 78572), we issued a
proposed rule containing certain policy
and regulatory revisions related to user
fees (proposed 2022 Payment Notice). In
the January 19, 2021 Federal Register
(86 FR 6138), HHS issued a rule
finalizing certain of the provisions in
the proposed 2022 Payment Notice (part
1 of the 2022 Payment Notice final rule).
In the May 5, 2021 Federal Register (86
FR 24140), HHS published a second
final rule addressing the remainder of
the proposed provisions (part 2 of the
2022 Payment Notice final rule). In the
July 1, 2021 Federal Register (86 FR
35156), HHS and the Department of the
Treasury released a proposed rule
proposing to amend certain policies in
part 1 of the 2022 Payment Notice final
rule, and finalized the rule in the
September 27, 2021 Federal Register (86
FR 53412) (part 3 of the 2022 Payment
Notice final rule).
5. Essential Health Benefits
On December 16, 2011, HHS released
a bulletin that outlined an intended
regulatory approach for defining EHB,
including a benchmark-based
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framework.14 A proposed rule relating
to EHBs was published in the November
26, 2012 Federal Register (77 FR
70643). We established requirements
relating to EHBs in the Standards
Related to Essential Health Benefits,
Actuarial Value, and Accreditation
Final Rule, which was published in the
February 25, 2013 Federal Register (78
FR 12833) (EHB Rule). In the 2019
Payment Notice, published in the April
17, 2018 Federal Register (83 FR
16930), we added § 156.111 to provide
states with additional options from
which to select an EHB-benchmark plan
for PYs 2020 and beyond.
6. Medical Loss Ratio (MLR)
We published a request for comment
on section 2718 of the PHS Act in the
April 14, 2010 Federal Register (75 FR
19297), and published an interim final
rule with a 60-day comment period
relating to the MLR program on
December 1, 2010 (75 FR 74863). A final
rule with a 30-day comment period was
published in the December 7, 2011
Federal Register (76 FR 76573). An
interim final rule with a 60-day
comment period was published in the
December 7, 2011 Federal Register (76
FR 76595). A final rule was published
in the Federal Register on May 16, 2012
(77 FR 28790). The MLR program
requirements were amended in final
rules published in the March 11, 2014
Federal Register (79 FR 13743), the May
27, 2014 Federal Register (79 FR
30339), the February 27, 2015 Federal
Register (80 FR 10749), the March 8,
2016 Federal Register (81 FR 12203),
the December 22, 2016 Federal Register
(81 FR 94183), the April 17, 2018
Federal Register (83 FR 16930), the May
14, 2020 Federal Register (85 FR
29164), and the May 5, 2021 Federal
Register (86 FR 24140), and an interim
final rule that was published in the
September 2, 2020 Federal Register (85
FR 54820).
7. Quality Improvement Strategy
We promulgated regulations in 45
CFR 155.200(d) to direct Exchanges to
evaluate quality improvement strategies,
and 45 CFR 156.200(b) that direct QHP
issuers to implement and report on a
quality improvement strategy or
strategies consistent with section
1311(g) standards as a QHP certification
criteria for participation in an Exchange.
In the 2016 Payment Notice, published
in the February 27, 2015 Federal
Register (80 FR 10749), we finalized
14 ‘‘Essential Health Benefits Bulletin.’’ December
16, 2011. Available at https://www.cms.gov/CCIIO/
Resources/Files/Downloads/essential_health_
benefits_bulletin.pdf.
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regulations at § 155.1130 to establish
standards and the associated timeframe
for QHP issuers to submit the necessary
information to implement QIS standards
for QHPs offered through an Exchange.
8. Nondiscrimination
Section 1311(b) and section 1321(b) of
the ACA provide that each state has the
opportunity to establish an Exchange. In
the July 15, 2011 Federal Register (76
FR 41866), HHS published the ‘‘Patient
Protection and Affordable Care Act;
Establishment of Exchanges and
Qualified Health Plans’’ proposed rule
to implement section 1311(b) and
section 1321(b) of the ACA. In the
March 27, 2012 Federal Register (77 FR
18310), HHS published the ‘‘Patient
Protection and Affordable Care Act;
Establishment of Exchanges and
Qualified Health Plans; Exchange
Standards for Employers’’ final rule and
interim final rule (hereinafter referred to
as the ‘‘Exchange Standards final rule’’),
which included nondiscrimination
protections.
Section 1302 of the ACA provides for
the establishment of an EHB package
that includes coverage of EHB and
actuarial value requirements. In the
November 26, 2012 Federal Register (77
FR 70644), HHS published the ‘‘Patient
Protections and Affordable Care Act;
Standards Related to Essential Health
Benefits, Actuarial Value, and
Accreditation’’ proposed rule to
implement section 1302 of the ACA. In
the February 25, 2013 Federal Register
(78 FR 12834), HHS published the
‘‘Patient Protections and Affordable
Care Act; Standards Related to Essential
Health Benefits, Actuarial Value, and
Accreditation’’ final rule, which
included nondiscrimination protections.
Sections 2701, 2702, and 2703 of the
PHS Act and Section 1312(c) of the ACA
provide protections to individuals and
employers in obtaining health insurance
coverage. In the November 26, 2012
Federal Register (77 FR 70584), HHS
published the ‘‘Patient Protection and
Affordable Care Act; Health Insurance
Market Rules; Rate Review’’ proposed
rule to implement sections 2701, 2702,
and 2703 of the PHS Act and section
1312(c) of the ACA. In the February 27,
2013 Federal Register (78 FR 13406),
HHS published the ‘‘Patient Protections
and Affordable Care Act; Health
Insurance Market Rules; Rate Review’’
final rule, which included
nondiscrimination protections.
In the HHS Notice of Benefit and
Payment Parameters for 2017 proposed
rule, published in the December 2, 2015
Federal Register (80 FR 75488), HHS
proposed policies for nondiscrimination
protections into the relevant notice of
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benefit and payment parameters. In the
March 8, 2016 Federal Register (81 FR
12204), HHS published the HHS Notice
of Benefit and Payment Parameters for
2017 final rule, which included
nondiscrimination protections.
In the Nondiscrimination in Health
and Human Education Programs or
Activities final rule on section 1557 of
the ACA, published in the June 19, 2020
Federal Register (85 FR 37160), HHS
removed nondiscrimination protections
on the basis of gender identity and
sexual orientation from various CMS
nondiscrimination regulations. In the
HHS Notice of Interpretation and
Enforcement of Section 1557 of the
Affordable Care Act and Title IX of the
Education Amendments of 1972,
published in the May 25, 2021 Federal
Register (86 FR 27984), HHS informed
the public that HHS will interpret and
enforce section 1557’s and Title IX’s
prohibition on discrimination on the
basis of sex to include discrimination
based on sexual orientation and gender
identity.
B. Stakeholder Consultation and Input
HHS has consulted with stakeholders
on policies related to the PHS Act
federal market reform requirements, the
operation of Exchanges and the risk
adjustment (including HHS–RADV)
program. We have held a number of
meetings with consumers, providers,
employers, health plans, advocacy
groups and the actuarial community to
gather public input. We have solicited
input from state representatives on
numerous topics, particularly EHBs,
state mandates, and risk adjustment. We
consulted with stakeholders through
regular meetings with the National
Association of Insurance Commissioners
(NAIC), regular contact with states
through the Exchange Blueprint
approval and general Exchange
oversight processes, and meetings with
Tribal leaders and representatives,
health insurance issuers, trade groups,
consumer advocates, employers, and
other interested parties. We considered
all public input we received as we
developed the policies in this proposed
rule.
C. Structure of Proposed Rule
The regulations outlined in this
proposed rule would be codified in 45
CFR parts 144, 147, 153, 155, 156 and
158.
The proposed changes to 45 CFR part
144 would remove superfluous language
from the definition of large group
market.
The proposed changes to 45 CFR part
147 would prohibit issuers from
discriminating against individuals in
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issuer marketing practices and benefit
designs based on sexual orientation and
gender identity. We also propose to
reinterpret the guaranteed availability
requirements in § 147.104 such that
issuers could not refuse to effectuate
new coverage based on failure of an
individual or employer to pay
premiums owed for prior coverage.
The proposed changes to 45 CFR part
153 would recalibrate the 2023 benefit
year risk adjustment models using the
2017, 2018, and 2019 enrollee-level
External Data Gathering Environment
(EDGE) data. We also propose to update
the adult and child risk adjustment
models for 2023 and beyond to better
predict plan liability for certain
subpopulations. We propose to update
the adult risk adjustment models by
removing the current severity illness
factors and replacing the current
enrollment duration factors with
enrollment duration factors contingent
on the enrollee having at least one HCC.
In addition, we propose to update the
adult and child risk adjustment models
by adding a two-stage weighted
approach to model recalibrations and an
interacted HCC count model
specification for 2023 and beyond. We
propose to continue applying a market
pricing adjustment to the plan liability
associated with Hepatitis C drugs in the
risk adjustment models, consistent with
the approach adopted beginning with
the 2020 models. We discuss removing
the mapping of hydroxychloroquine
sulfate to RXC 09 (Immune
Suppressants and Immunomodulators)
in the 2018 and 2019 benefit year
enrollee-level EDGE data used for the
annual recalibration of the HHS risk
adjustment models. We also propose for
the 2024 benefit year and beyond to
recalibrate the models using the final,
fourth quarter (Q4) RXC mapping
document that was applicable for each
benefit year of data that is included in
the current year’s model recalibration.
We propose using this approach for
recalibration of the 2023 adult risk
adjustment models with the exception
of the 2017 enrollee-level EDGE data
year, for which we propose to use the
most recent RXC mapping document
that was available when we first
processed the 2017 enrollee-level EDGE
data (that is, Q2 2018).We also propose
to collect and extract five new data
elements including ZIP code, race,
ethnicity, ICHRA indicator, and a
subsidy indicator as part of the required
risk adjustment data that issuers must
make accessible to HHS in states where
HHS is operating the risk adjustment
program. We also propose to extract
three new data elements issuers already
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provide to HHS as part of the required
risk adjustment data submissions (plan
ID, rating area, and subscriber indicator)
and to expand the permitted uses of the
risk adjustment data and reports.
Additionally, we propose an
amendment to § 153.730 to address
situations when April 30 does not fall
on a business day and to provide that
when this occurs, the deadline for
issuers to submit the required risk
adjustment data in states where HHS
operates the program would be the next
applicable business day.
The proposals in part 153 also relate
to risk adjustment state flexibility
requests. We propose to repeal the
ability of states to request a reduction in
risk adjustment transfers calculated by
HHS under the state payment transfer
formula starting with the 2024 benefit
year, while proposing to create an
exception for any state that has
requested a reduction in prior benefit
years. In addition, we solicit comments
on the requests from Alabama to reduce
risk adjustment state transfers for the
2023 benefit year in the individual
(including the catastrophic and noncatastrophic risk pools) and small group
markets.
In part 153 we also propose the risk
adjustment user fee for the 2023 benefit
year and modifications to the error
estimation methodology applied in
HHS–RADV. We propose updating the
HHS–RADV error estimation process to
extend the application of Super HCCs
beyond the sorting step that assigns
HCCs to failure rate groups to also apply
throughout the HHS–RADV error rate
calculation processes and to specify that
Super HCCs will be defined separately
according to the model (infant, child,
adult) to which an enrollee is subject.
We also propose to constrain to zero any
failure rate group outlier negative failure
rate, regardless of whether the outlier
issuer has a negative or positive error
rate. Finally, we propose that whenever
HHS recoups high-cost risk pool funds
as a result of audits of risk adjustment
covered plans, an actionable
discrepancy, or a successful
administrative appeal, the recouped
high-cost risk pool funds will be used to
reduce high-cost risk pool charges for
that national high-cost risk pool
beginning for the next benefit year for
which a high cost risk pool payment has
not already been calculated.
In addition, the proposals regarding
part 153 also relate to MLR reporting
requirements and clarify how issuers
should report certain ACA program
amounts that could be subject to
reconsideration for MLR reporting
purposes. We propose to separately
address and reference HHS–RADV
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adjustments to make clear that HHS
expects issuers to report HHS–RADV
adjustments as part of their MLR reports
in the same manner as they report risk
adjustment payment and charge
amounts.
The proposed changes to 45 CFR part
155 would allow Exchanges to
implement a verification process for
enrollment in or eligibility for an
eligible employer sponsored plan based
on the Exchange’s assessment of risk for
inappropriate payments of APTC/CSR.
In part 155 we also propose to require
all Exchanges to prorate when
administering APTC for enrollees
enrolled in a particular policy for less
than the full coverage month, including
when the enrollee is enrolled in
multiple policies within a month, each
lasting less than the full coverage
month. We also propose new
requirements in part 155 related to the
QHP comparative information and
standardized disclaimer required to be
displayed on web-broker non-Exchange
websites, a prohibition on displaying
QHP advertisements or otherwise
providing favored or preferred
placement in the display of QHPs on
web-broker non-Exchange websites
based on compensation agents, brokers,
or web-brokers receive from QHP
issuers, and a requirement regarding the
prominent display of a clear explanation
of the rationale for explicit QHP
recommendations and the methodology
for the default display of QHPs on webbroker non-Exchange websites to better
inform and protect consumers using
such websites. We also propose changes
to part 155, to clarify the FFE standards
of conduct and what it means for agents,
brokers, and web-brokers to provide the
Exchange with correct information
under section 1411(b) of the ACA,
including ensuring that accurate
consumer information is being entered
on Exchange applications. Finally, we
propose changes to part 155 to set forth
prohibited agent, broker, and webbroker business practices commonly
observed by HHS and to create
enforceable standards under which HHS
may take enforcement action against
agents, brokers, and web-brokers when
these prohibited business practices are
discovered.
In 45 CFR part 156, as we do every
year in the HHS notice of benefit and
payment parameters, we propose to
update the user fee rates for the 2023
benefit year for all issuers participating
on the Exchanges using the Federal
platform. We note that we intend to
publish the 2023 premium adjustment
percentage index and related payment
parameters in guidance as finalized in
part 2 of the 2022 Payment Notice. The
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proposed changes to part 156 also
include technical amendments to
§ 156.50 to conform the user fee
regulations with the repeal of Exchange
Direct Enrollment (DE) option finalized
in part 3 of the 2022 Payment Notice.15
We are proposing changes to § 156.430
to clarify that the CSR data submission
process is mandatory only for those
issuers that receive CSR payments from
HHS for any part of the benefit year as
a result of HHS possessing a valid
appropriation to make CSR payments,
and voluntary for other issuers.
In part 156, we also propose an
evergreen deadline for EHB-benchmark
plan applications by states, as well as
proposing to remove the ability for
states to permit issuers to substitute
benefits between EHB categories,
proposing to change de minimis
thresholds for the AV of plans subject to
the AV requirements, as well as
narrower de minimis thresholds for
individual market silver QHPs and
income-based CSR plan variations; and
proposing to remove the annual
reporting requirement on states to report
state-required benefits in addition to the
EHB to HHS.
In part 156, we also propose to require
issuers of QHPs in FFEs and SBE–FPs
to offer through the Exchange
standardized QHP options beginning in
PY 2023. We also propose to update the
QIS standards in part 156 to require
QHP issuers to address health and
health care disparities as a specific topic
area within their QIS beginning with PY
2023.
The proposed changes to part 158
would clarify that only those provider
incentives and bonuses that are tied to
clearly defined, objectively measurable,
and well-documented clinical or quality
improvement standards that apply to
providers may be included in incurred
claims for MLR reporting and rebate
calculation purposes. The proposed
changes to part 158 would also specify
that only expenses directly related to
activities that improve health care
quality may be included as QIA
expenses for MLR reporting and rebate
calculation purposes. In addition, the
proposed changes to part 158 would
make a technical amendment to
§ 158.170(b) to correct an oversight and
remove the reference to the percentage
of premium QIA reporting option
described in § 158.221(b)(8), a provision
that was vacated by the United States
District Court for the District of
Maryland in City of Columbus, et al. v.
15 86
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Cochran,16 and thus deleted in part 2 of
the 2022 Payment Notice final rule.
III. Provisions of the Proposed HHS
Notice of Benefit and Payment
Parameters for 2023
A. Part 144—Requirements Relating to
Health Insurance Coverage
1. Definitions (§ 144.103)
We propose to remove superfluous
language from the definition of large
group market. The definition currently
provides that ‘‘Large group market’’
means the health insurance market
under which individuals obtain health
insurance coverage (directly or through
any arrangement) on behalf of
themselves (and their dependents)
through a group health plan maintained
by a large employer, unless otherwise
provided under State law. We propose
to amend the definition by deleting the
phrase ‘‘unless otherwise provided
under State law.’’ The phrase has no
meaning or application, and does not
appear in the statutory definition of the
term in section 2791(e)(3) of the PHS
Act. That phrase was initially included
in the PHS Act regulatory definitions of
large group market, large employer, and
small employer adopted by HHS under
HIPAA.17 However, in final rules
published on October 30, 2013 (78 FR
65045), we amended the definitions of
large employer and small employer to
make them consistent with PHS Act
section 2791(e), as amended by the
ACA, and in so doing, removed that
phrase from the definitions. At that
time, we inadvertently neglected to
delete the phrase from the regulatory
definition of large group market, and we
now propose to do so, in order to align
these definitions and make the
regulatory definition for large group
market consistent with the definition
under the ACA.
B. Part 147—Health Insurance Reform
Requirements for the Group and
Individual Health Insurance Markets
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1. Guaranteed Availability of Coverage
(§ 147.104)
a. Past-Due Premiums
We propose to re-interpret the
guaranteed availability requirement at
section 2702 of the PHS Act and its
implementing regulation at § 147.104 to
require issuers to accept individuals and
employers who apply for coverage, even
where the individual or employer owes
past-due premiums for coverage from
the same issuer or another issuer in the
same controlled group. On January 28,
2021, President Biden issued Executive
Order 14009, ‘‘Strengthening Medicaid
and the Affordable Care Act’’ (E.O.
14009).18 Section 3 of E.O. 14009 directs
HHS, and the heads of all other
executive departments and agencies
with authorities and responsibilities
related to Medicaid and the ACA, to
review all existing regulations, orders,
guidance documents, policies, and any
other similar agency actions to
determine whether they are inconsistent
with policy priorities described in
Section 1 of E.O. 14009, to include
protecting and strengthening the ACA
and making high-quality health care
accessible and affordable for all
individuals. Consistent with E.O. 14009,
specifically section 3(iv), this proposal
intends to remove an unnecessary
barrier to individuals and families
attempting to enroll into health coverage
in the individual market.
Specifically, we propose to
redesignate § 147.104(i) as § 147.104(j)
and add a new § 147.104(i) to specify
that a health insurance issuer that
denies coverage to an individual or
employer due to the individual’s or
employer’s failure to pay premium
owed under a prior policy, certificate, or
contract of insurance, including by
attributing payment of premium for a
new policy, certificate, or contract of
insurance to the prior policy, certificate,
or contract of insurance, violates
§ 147.104(a). The guaranteed availability
provisions require health insurance
issuers offering non-grandfathered
coverage in the individual or group
market to accept every individual and
employer in the state that applies for
such coverage unless an exception
applies. Individuals and employers
typically are required to pay the first
month’s premium to effectuate coverage.
Under the current interpretation of the
guaranteed availability requirement
stated in the Market Stabilization final
rule, to the extent permitted by
applicable state law, an issuer does not
violate the guaranteed availability
requirements under § 147.104 where the
issuer attributes a premium payment
made for new coverage to any past-due
premiums owed for coverage from the
same issuer or another issuer in the
same controlled group within the prior
12-month period before effectuating
enrollment in the new coverage. This
policy addressed concerns that
individuals might take unfair advantage
of the rules regarding grace periods.19
18 E.O.
16 523
F. Supp. 3d 731 (D. Md. 2021).
17 62 FR 16894 (April 8, 1997) and 69 FR 78720
(Dec. 30, 2004).
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14009; 86 FR 7793 (Feb. 2, 2021).
issuers are required, under § 156.270, to
provide a grace period of 3 consecutive months for
an enrollee, who, when failing to timely pay
19 QHP
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However, in part 3 of the 2022 Payment
Notice proposed rule, we stated our
intention to reassess this interpretation
to analyze whether this policy presents
unnecessary barriers to accessing health
coverage.20
After reevaluating our interpretation
of the guaranteed availability
requirement, we propose reinstating our
previous interpretation of the
guaranteed availability rules with
respect to non-payment of premiums.21
Under this interpretation, an issuer may
not apply any premium payment made
for new coverage in the same or a
different plan or product to any
outstanding debt owed from any
previous coverage and then refuse to
effectuate the new enrollment based on
failure to pay premiums. Thus, the
guaranteed availability requirement
would prohibit issuers from refusing to
effectuate new coverage due to failure to
pay outstanding premium debt from the
previous year.
Based on HHS’ experience since we
codified the currently-effective
interpretation of guaranteed availability,
we believe the current policy, has the
unintended consequence of creating
barriers to health coverage that
disproportionately affect low-income
individuals, and is therefore
inconsistent with the intent of the
guaranteed availability statutory
requirements. The current policy
heightens the risk of economic
hardships for low-income individuals
enrolled in health insurance coverage
with APTC. Individuals stop paying
premiums (and lose coverage due to
nonpayment of premiums) for a variety
of reasons throughout the year. For
example, commenters to the Market
Stabilization proposed rule stated that
individuals who are victims of crime, or
those grappling with domestic violence,
premiums, is receiving APTC. If the enrollee
exhausts the grace period without paying all
outstanding premiums, subject to a premium
payment threshold implemented under
§ 155.400(g), then the QHP issuer must terminate
the enrollee’s enrollment back to the last day of the
first month of the 3-month grace period. As a result,
an individual receiving APTC whose coverage is
terminated after the exhaustion of a grace period
would owe at most 1 month of premiums, net of
any APTC paid on their behalf to the issuer;
however, an individual who attempts to enroll in
new coverage while in a grace period, and whose
coverage has not yet been terminated, could owe up
to 3 months of premium, net of any APTC paid on
their behalf to the issuer.
20 86 FR 35156, 36071.
21 Federally-facilitated Marketplace (FFM) and
Federally-facilitated Small Business Health Options
Program Enrollment Manual, Section 6.3
Terminations for Non-Payment of Premiums,
https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/ENR_FFMSHOP_
Manual_080916.pdf (describing operational
requirements effective as of July 19, 2016, which
were superseded by subsequent publications).
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medical emergencies, incarceration, or
other urgent circumstances are often
forced to make difficult financial
decisions that may lead to failure to pay
their health insurance premiums. Even
for some middle-income families, the
high cost of health care for multiple
family members with chronic health
conditions may result in non-payment
of premiums.22 Requiring such
individuals to pay back past-due
premium plus a binder payment prior to
enrollment may present an
insurmountable barrier leading to gaps
in coverage. For this reason, HHS is of
the view that the current interpretation
of the guaranteed availability
requirement creates unnecessary
barriers to accessing health coverage.
HHS is also concerned that the
barriers created by the current
interpretation of guaranteed availability
disproportionately affect low-income
enrollees for whom APTC is paid.
Under federal law governing grace
periods for enrollees for whom APTC is
paid, QHP issuers must provide a 3month grace period before they are
allowed to terminate an enrollee’s
coverage for non-payment of premiums
and must continue to provide coverage
during the first month of the grace
period. As a result, those enrollees who
are unable to satisfy outstanding
premium payments by the end of the 3month grace period generally may owe
at least one month of past due premium
after their coverage is terminated. In
contrast, grace period rules for
individuals who are not eligible for
APTC are governed by state law. Many
state laws allow for termination back to
the end of the period for which an
enrollee paid premium, in which case
an enrollee without APTC whose
coverage is terminated for nonpayment
would not owe past-due premium when
they attempt to enroll in coverage
during a subsequent open enrollment or
special enrollment period. Enrollees for
whom APTC is paid generally may have
household incomes as low as 100
percent of the federal poverty level
(FPL) (which, for the 2021 benefit year,
is $12,760 for a single person
household).23 Thus, premium payment
policies that require payment of pastdue premiums prior to effectuation of
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22 John
Tozzi. (March 2018). ‘‘Why Some
Americans Are Risking It and Skipping Health
Insurance.’’ Bloomberg News. Retrieved from
https://www.bloomberg.com/news/features/201803-26/why-some-americans-are-risking-it-andskipping-health-insurance.
23 See 2021 Poverty Guidelines for the 48
Contiguous States and the District of Columbia,
available at https://aspe.hhs.gov/topics/povertyeconomic-mobility/poverty-guidelines/prior-hhspoverty-guidelines-federal-register-references/2020poverty-guidelines.
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new coverage are likely to
disproportionately affect low-income
enrollees with APTC, the individuals
who may be least able to pay all
outstanding premium debt among those
seeking coverage in the individual
market.
Conditioning health insurance
enrollment on the payment of past-due
premiums could disincentivize health
insurance enrollment altogether,
reducing the rate of enrollment for lowincome individuals. The economic
burden associated with being required
to pay past-due premiums prior to
enrolling in new coverage may prevent
low-income individuals from enrolling
in coverage and affect the demographics
of the risk pool. Various studies have
found that low-income families often
struggle to balance out-of-pocket health
care costs alongside rent or mortgage
payments, and other necessary living
expenses.24 Maintaining the current
interpretation of the guaranteed
availability rules would uphold barriers
to health insurance coverage for lowincome individuals, who face a greater
risk of poorer health outcomes.25
Reverting to the previous interpretation
of the guaranteed availability rules
would ensure individuals who stand to
benefit the most from health insurance
coverage can enroll in coverage, and
would promote more equitable access to
health insurance coverage. In addition,
the public health and economic crises
caused by the COVID–19 pandemic
exacerbated the hardships facing lowincome individuals and families. The
resulting financial and health insecurity
caused by the pandemic underscores the
critical role that access to continuous
health coverage will continue to play
during the ongoing and often
unpredictable challenges of the
pandemic and beyond. Returning to the
previous interpretation of the
guaranteed availability rule would
remove a barrier to accessing health
coverage that compounds the economic
challenges from the COVID–19 crisis.
In the Market Stabilization rule, we
noted concern that enrollees with APTC
may take advantage of guaranteed
availability by declining to make
premium payments for coverage at the
24 Tim Thomas, Ph.D.; Jose Hernandez, Ph.D.; et
al. (2019). The Evictions Study. The University of
California Berkeley and the University of
Washington. Retrieved from https://evictions.study/
index.html.
25 P.J. Cunningham; T.L. Green; R.T. Braun.
(February 2018). Income Disparities in the
Prevalence, Severity, and Costs of Co-Occurring
Chronic and Behavioral Health Conditions. Medical
Care. Retrieved from https://
www.commonwealthfund.org/publications/journalarticle/2018/feb/income-disparities-prevalenceseverity-and-costs-co-occurring.
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end of a benefit year without losing
coverage. Although this remains
possible, we are of the view that the
disparate negative impact on lowincome populations outweighs the
possible deterrent effect on individuals
who may try taking advantage of the
guaranteed availability rules. We seek
comment regarding the frequency of any
potential gaming behavior, as well as
information on the primary diagnoses
and services that may be involved in
suspected gaming situations so that we
may better assess any contributing
causes of such non-payment. For
example, non-payment may not be the
result of gaming, but could be indicative
of contextual challenges individuals
face in satisfying payment obligations.
We are particularly interested in
comments from issuers that have not
adopted a premium payment policy that
requires payment of past-due premiums
prior to effectuating enrollment. In
addition, we note that issuers are
generally not permitted to forgive pastdue premium debt, and can pursue
other mechanisms to collect past-due
premiums. We believe this mitigates the
risk that some enrollees may take
advantage of the guaranteed availability
rules.
We seek comment on this proposal.
b. Nondiscrimination Based on Sexual
Orientation and Gender Identity
We propose to amend 45 CFR
147.104(e) such that its
nondiscrimination protections would
explicitly prohibit discrimination based
on sexual orientation and gender
identity. HHS previously codified such
nondiscrimination protections at
§ 147.104(e), but amendments made in
2020 to § 147.104(e) removed any
reference to sexual orientation and
gender identity. If finalized, this
proposal would revert § 147.104(e) to
the pre-2020 nondiscrimination
protections.
Section 147.104(e) states that a health
insurance issuer and its officials,
employees, agents, and representatives
must not employ marketing practices or
benefit designs that would have the
effect of discouraging the enrollment of
individuals with significant health
needs in health insurance coverage or
discriminate based on race, color,
national origin, present or predicted
disability, age, sex, expected length of
life, degree of medical dependency,
quality of life, or other health
conditions. Previously, in the 2014
Market Rules, we finalized § 147.104(e)
to also prohibit discrimination based on
sexual orientation and gender
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identity.26 However, in the 2020 final
rule that revised regulations
implementing section 1557 of the ACA,
HHS also revised certain CMS
regulations, including those at
§ 147.104(e), by removing sexual
orientation and gender identity as bases
of discrimination subject to the CMS
regulations’ nondiscrimination
protections.27 The 2020 section 1557
final rule is the subject of ongoing
litigation.28
Pursuant to section 1311(c)(1)(A) of
the ACA, the HHS Secretary was
required to establish by regulation
criteria for certification that require
QHP issuers to meet marketing
requirements and not employ marketing
practices or benefit designs that will
have the effect of discouraging the
enrollment of individuals with
significant health needs in QHPs. Under
the authority of section 1321(a) of the
ACA, which provides the HHS Secretary
broad rulemaking authority with respect
to the establishment and operation of
Exchanges and the offering of QHPs
through such Exchanges, in the 2012
Exchange Standards final rule, CMS
codified a regulation implementing this
requirement at § 156.225. Under the
general rulemaking authority in section
2792 of the PHS Act, which provides
the HHS Secretary broad rulemaking
authority to promulgate regulations as
may be necessary or appropriate to carry
out the provisions of title XXVII of the
PHS Act, the 2014 Market Rules
adopted a similar standard in
§ 147.104(e), applying this requirement
to the group and individual health
insurance markets. Furthermore, in
order to ensure consistency against
employing discriminatory marketing
practices and benefit designs, HHS
finalized § 147.104(e) to align with other
prohibitions on discrimination that HHS
had already codified at that time with
respect to EHB in § 156.125, with
respect to standards applicable to QHPs
under § 156.200(e) that included
protections against discrimination on
the basis of sexual orientation and
gender identity, and with respect to
marketing standards in § 156.225. The
2014 Market Rules further clarified that
discriminatory marketing practices or
benefit designs represent a failure by
issuers to comply with the guaranteed
availability requirements in PHS Act
26 78
FR 13406 (February 27, 2013).
FR 37160 (June 19, 2020); See id. at 37218–
21 (the 2020 section 1557 final rule revised the
following CMS regulations: 45 CFR 147.104,
155.120, 155.220, 156.200, 156.1230).
28 The 2020 section 1557 final rule is the subject
of several lawsuits and court orders. For more
information, see https://www.hhs.gov/civil-rights/
for-individuals/section-1557/.
27 85
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section 2702, as such practices or
designs can have the effect of
discouraging or preventing the
enrollment of individuals in health
insurance coverage.
In the 2020 section 1557 final rule,
HHS revised the section 1557
implementing regulation. Among other
things, the rule removed the definition
of ‘‘on the basis of sex,’’ which included
gender identity, and instead purported
to rely upon the ‘‘plain meaning’’ of the
word ‘‘sex’’ in the underlying Title IX
regulation.29 However, as HHS noted in
the 2020 section 1557 final rule, CMS
possesses statutory authority
independent of section 1557 of the ACA
to prohibit discrimination in the group
and individual markets.30
Following public posting of the 2020
section 1557 final rule on the agency’s
website, the Supreme Court held in
Bostock v. Clayton County, 140 S. Ct.
1731 (2020), that discrimination on the
basis of sex under Title VII of the Civil
Rights Act of 1964 includes
discrimination on the basis of sexual
orientation and gender identity. On
January 20, 2021, the President signed
Executive Order 13988 stating that it is
the Administration’s policy to prevent
and combat discrimination on the basis
of gender identity and sexual
orientation, and that under Bostock’s
reasoning, laws that prohibit sex
discrimination also prohibit
discrimination on the basis of gender
identity and sexual orientation, so long
as the laws do not contain sufficient
indications to the contrary.31 The
Executive Order (E.O.) also instructed
all agency heads, including the HHS
Secretary, to review all existing
regulations, guidance documents, and
other agency actions to determine
whether they are consistent with the
aforementioned policy, and to consider
whether to suspend, revise, or rescind
any agency actions that are inconsistent
with it. The Department of Justice (DOJ)
issued a memorandum on March 26,
2021 that determined the court’s
reasoning in Bostock applies to Title IX
and thus that Title IX’s prohibition on
discrimination on the basis of sex
includes discrimination on the basis of
gender identity and sexual
29 85
FR 37160, 37166 (June 19, 2020). The 2016
and 2020 section 1557 final rules are the subject of
several lawsuits and court orders. For more
information, see https://www.hhs.gov/civil-rights/
for-individuals/section-1557/, https://
www.hhs.gov/civil-rights/for-individuals/section1557/.
30 85 FR 37160, 37219, 37218–21 (June 19, 2020).
31 Executive Order 13988 on Preventing and
Combating Discrimination on the Basis of Gender
Identity or Sexual Orientation, 86 FR 7023 (Jan. 20,
2021).
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orientation.32 Following the E.O. and
DOJ’s memorandum, HHS released on
May 10, 2021 a Notice that HHS will
interpret and enforce section 1557’s and
Title IX’s prohibition on discrimination
on the basis of sex to include: (1)
Discrimination on the basis of sexual
orientation; and (2) discrimination on
the basis of gender identity.33
Likewise, CMS is not relying on
authority from section 1557 of the ACA
for the proposal at § 147.104(e) or the
parallel proposals to nondiscrimination
regulations at §§ 155.120(c), 155.220(j),
156.125(b), 156.200(e), and 156.1230(b).
We will further elaborate in the
respective preambles to §§ 147.104(e),
155.120(c), 155.220(j), 156.125(b),
156.200(e), and 156.1230(b) the specific
ACA authority CMS is relying on to
prohibit discrimination in the group and
individual markets. CMS proposes to
exercise the same authority as it
exercised in the 2014 Market Rules to
amend § 147.104(e) to again prohibit a
health insurance issuer and its officials,
employees, agents, and representatives
from discriminating in its marketing
practices or benefit designs on the basis
of sexual orientation and gender
identity. Specifically, CMS proposes to
again rely on section 2702 of the PHS
Act, as well as section 2792 of the PHS
Act, which provides the HHS Secretary
broad rulemaking authority to
promulgate regulations as may be
necessary or appropriate to carry out the
provisions of title XXVII of the PHS Act.
These are the same authorities CMS
relies upon for implementation of
existing nondiscrimination protections
at § 147.104(e). Utilizing these same
authorities to again prohibit
discrimination based on sexual
orientation and gender identity would
be consistent with the authority CMS
relies upon for those existing
protections at § 147.104(e) that currently
prohibit discrimination on the basis of
race, color, national origin, present or
predicted disability, age, sex, expected
length of life, degree of medical
dependency, quality of life, or other
health conditions.
People who identify as part of the
lesbian, gay, bisexual, transgender, and
32 U.S. Dep’t of Justice, Memorandum on
Application of Bostock v. Clayton County to Title
IX of the Education Amendments of 1972 (Mar. 26,
2021), https://www.justice.gov/crt/page/file/
1383026/download. On June 16, 2021, the
Department of Education’s Office for Civil Rights
issued a similar Notice explaining that it too will
enforce Title IX’s prohibition on discrimination on
the basis of sex to include: (1) Discrimination based
on sexual orientation; and (2) discrimination based
on gender identity (available at https://
www2.ed.gov/about/offices/list/ocr/docs/202106titleix-noi.pdf).
33 86 FR 27984.
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queer (LGBTQI+) community face
pervasive health and health care
disparities, and are at higher risk for
many concomitant conditions,
including substance use and 34 mental
health disorders, sexually transmitted
infections,35 HIV,36 cancer,
cardiovascular disease, and obesity.37
Overall, LGBTQI+ people report being
in poorer health than non-LGBTQI+
individuals. LGBTQI+ people of all
genders are more likely to become
disabled at a younger age than
heterosexual individuals.38 In addition
to disparities in health outcomes,
LGBTQI+ people face barriers to
obtaining appropriate health care and
transgender people who can access
insurance may nonetheless be denied
coverage for needed services. For
example, nearly half of transgender
respondents in one survey said their
health insurance company denied them
gender affirming surgery,39 and a similar
proportion reported that they were
34 Hilary Daniel et al, Annals of Internal Med.
Position Papers, Lesbian, Gay, Bisexual, and
Transgender Health Disparities: Executive
Summary of a Policy Position Paper From the
American College of Physicians (July 21, 2105),
https://www.acpjournals.org/doi/full/10.7326/M142482?journalCode=aim.
35 Hilary Daniel et al, Annals of Internal Med.
Position Papers, Lesbian, Gay, Bisexual, and
Transgender Health Disparities: Executive
Summary of a Policy Position Paper From the
American College of Physicians (July 21, 2105),
https://www.acpjournals.org/doi/full/10.7326/M142482?journalCode=aim.
36 U.S. Dep’t of Health & Human Servs., Ctrs. for
Disease Control and Prevention, HIV Surveillance
Report, 2019; Vol. 32 (May 2021), https://
www.cdc.gov/hiv/pdf/library/reports/surveillance/
cdc-hiv-surveillance-report-2018-updated-vol32.pdf.
37 See, for example, Lesbian, Gay, Bisexual, and
Transgender Health, Healthy People 2020, https://
www.healthypeople.gov/2020/topics-objectives/
topic/lesbian-gay-bisexual-and-transgender-health
#:∼:text=Research%20suggests%20that
%20LGBT%20individuals,
%2C2%2C%203%20and%20suicide; Hafeez,
Hudaisa et al. ‘‘Healthcare Disparities Among
Lesbian, Gay, Bisexual, and Transgender Youth: A
Literature Review.’’ Cureus vol. 9,4 e1184. 20 Apr.
2017, doi:10.7759/cureus.1184 (https://
www.ncbi.nlm.nih.gov/pmc/articles/PMC5478215/);
Fredriksen-Goldsen KI, Kim H–J, Barkan SE,
Muraco A and Hoy-Ellis CP (2013) Health
disparities among lesbian, gay, and bisexual older
adults: Results from a population-based study.
American Journal of Public Health 103, 1802–1809;
Billy A. Caceres et al. ‘‘A Systematic Review of
Cardiovascular Disease in Sexual Minorities’’,
American Journal of Public Health 107, no. 4 (April
1, 2017): pp. e13–e21.
38 Hilary Daniel et al, Annals of Internal Med.
Position Papers, Lesbian, Gay, Bisexual, and
Transgender Health Disparities: Executive
Summary of a Policy Position Paper From the
American College of Physicians (July 21, 2105),
https://www.acpjournals.org/doi/full/10.7326/M142482?journalCode=aim.
39 For purposes of this preamble, the term
‘‘gender affirming care’’ means gender affirming
care for transgender individuals. This may also be
referred to as ‘‘transition related care.’’
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denied coverage for hormone therapy.40
Beyond health coverage issues,
LGBTQI+ people may struggle to access
care because of cost barriers. LGBTQI+
people are also more likely than others
to report postponing or forgoing health
care due to costs, and costs were an
even greater obstacle for younger
LGBTQI+ people and those who are
transgender—especially transgender
people of color.41
We believe that prohibiting
discrimination based on sexual
orientation or gender identity can lead
to improved health outcomes for this
community 42 and that the removal of
such protections in the 2020 section
1557 final rule frustrated not only
guaranteed availability requirements,
but also the broader aim of improving
health equity. Without protection from
discrimination, individuals may
continue to face barriers to accessing
medically necessary health care. For
example, without protection from
discrimination, transgender individuals
may face barriers or be denied medically
necessary gender-affirming care. We
believe amending the nondiscrimination
protections as proposed at § 147.104(e)
to again explicitly prohibit
discrimination based on sexual
orientation and gender identity is
warranted in light of the existing trends
in health care discrimination and to
better address barriers to health equity
for LGBTQI+ individuals.43 As
proposed, such revisions to § 147.104(e)
would also support the original
objective of ensuring consistency
against employing discriminatory
marketing practices and benefit designs,
as we are proposing parallel changes to
nondiscrimination regulations at
§§ 147.104(e), 155.120(c), 155.220(j),
156.125(b), 156.200(e), and 156.1230(b).
If any of the provisions at
§§ 147.104(e), 155.120(c), 155.220(j),
156.125(b), 156.200(e), and 156.1230(b)
are held to be invalid or unenforceable
40 Sharita Gruberg et al, Center for American
Progress, The State of the LGBTQ Community in
2020 (Oct. 6, 2020), https://
www.americanprogress.org/issues/lgbtq-rights/
reports/2020/10/06/491052/state-lgbtq-community2020/.
41 Sharita Gruberg et al, Center for American
Progress, The State of the LGBTQ Community in
2020 (Oct. 6, 2020), https://
www.americanprogress.org/issues/lgbtq-rights/
reports/2020/10/06/491052/state-lgbtq-community2020/.
42 Ward, BW, Dahlhamer, JM, Galinsky, AM, and
Joestl, SS. Sexual Orientation & Health Among U.S.
Adults: National Health Interview Survey, CDC
National Health Statistics Report 77, 2014.
43 Nguyen, T.T., Vable, A.M., Glymour, M.M. et
al. Trends for Reported Discrimination in Health
Care in a National Sample of Older Adults with
Chronic Conditions. J GEN INTERN MED 33, 291–
297 (2018). https://doi.org/10.1007/s11606-0174209-5.
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597
by its terms, or as applied to any person
or circumstance, it shall be severable
from this part and shall not affect the
remainder thereof or the application of
the provision to other persons not
similarly situated or to other dissimilar
circumstances. In enforcing the
nondiscrimination provisions in the
corresponding CMS regulations, HHS
will comply with laws protecting the
exercise of conscience and religion,
including the Religious Freedom
Restoration Act (42 U.S.C. 2000bb
through 2000bb–4) and all other
applicable legal requirements.
We seek comment on this proposal.
C. Part 153—Standards Related to
Reinsurance, Risk Corridors, and Risk
Adjustment
In subparts A, D, G, and H of part 153,
we established standards for the
administration of the risk adjustment
program. The risk adjustment program
is a permanent program created by
section 1343 of the ACA that transfers
funds from lower-than-average risk, risk
adjustment covered plans to higherthan-average risk, risk adjustment
covered plans in the individual, small
group markets, or merged markets,
inside and outside the Exchanges. In
accordance with § 153.310(a), a state
that is approved or conditionally
approved by the Secretary to operate an
Exchange may establish a risk
adjustment program, or have HHS do so
on its behalf.44 HHS did not receive any
requests from states to operate risk
adjustment for the 2023 benefit year.
Therefore, HHS will operate risk
adjustment in every state and the
District of Columbia for the 2023 benefit
year.
1. Sequestration
In accordance with the OMB Report to
Congress on the Joint Committee
Reductions for Fiscal Year 2022, the
permanent risk adjustment program is
subject to the fiscal year 2022
sequestration.45 The federal
government’s 2022 fiscal year begins
October 1, 2021. Therefore, the risk
adjustment program will be sequestered
at a rate of 5.7 percent for payments
made from fiscal year 2022 resources
(that is, funds collected during the 2022
fiscal year).
HHS, in coordination with OMB, has
determined that, under section 256(k)(6)
of the Balanced Budget and Emergency
Deficit Control Act of 1985 (Pub. L. 99–
177, enacted December 12, 1985), as
44 Also
see 42 U.S.C. 18041(c)(1).
45 https://www.whitehouse.gov/wp-content/
uploads/2021/05/BBEDCA_251A_Sequestration_
Report_FY2022.pdf.
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amended, and the underlying authority
for the risk adjustment program, the
funds that are sequestered in fiscal year
2022 from the risk adjustment program
will become available for payment to
issuers in fiscal year 2023 without
further Congressional action. If Congress
does not enact deficit reduction
provisions that replace the Joint
Committee reductions, the program
would be sequestered in future fiscal
years, and any sequestered funding
would become available in the fiscal
year following that in which it was
sequestered.
Additionally, we note that the
Coronavirus Aid, Relief, and Economic
Security (CARES) Act amended section
251A(6) of the Balanced Budget and
Emergency Deficit Control Act of 1985
and extended sequestration for the risk
adjustment program through fiscal year
2030 at a rate of 5.7 percent per fiscal
year.46
2. HHS Risk Adjustment (§ 153.320)
The HHS risk adjustment models
predict plan liability for an average
enrollee based on that person’s age, sex,
and diagnoses (also referred to as
hierarchical condition categories
(HCCs)), producing a risk score. The
HHS risk adjustment methodology
utilizes separate models for adults,
children, and infants to account for
clinical and cost differences in each age
group. In the adult and child models,
the relative risk assigned to an
individual’s age, sex, and diagnoses are
added together to produce an individual
risk score. Additionally, to calculate
enrollee risk scores in the adult models,
we added enrollment duration factors
beginning with the 2017 benefit year,
and prescription drug categories (RXCs)
beginning with the 2018 benefit year.47
Infant risk scores are determined by
inclusion in one of 25 mutually
exclusive groups, based on the infant’s
maturity and the severity of diagnoses.
If applicable, the risk score for adults,
children, or infants is multiplied by a
CSR factor. The enrollment-weighted
average risk score of all enrollees in a
particular risk adjustment covered plan
(also referred to as the plan liability risk
score) within a geographic rating area is
one of the inputs into the risk
adjustment state payment transfer
formula, which determines the state
transfer payment or charge that an
issuer will receive or be required to pay
46 https://www.congress.gov/116/bills/s3548/
BILLS-116s3548is.pdf.
47 For the 2018 benefit year, there were 12 RXCs,
but starting with the 2019 benefit year, the two
severity-only RXCs were removed from the adult
risk adjustment models. See, for example, 83 FR
16941.
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for that plan for the applicable state
market risk pool. Thus, the HHS risk
adjustment models predict average
group costs to account for risk across
plans, in keeping with the Actuarial
Standards Board’s Actuarial Standards
of Practice for risk classification.
a. Data for Risk Adjustment Model
Recalibration for 2023 Benefit Year and
Beyond
We are proposing to recalibrate the
2023 benefit year risk adjustment
models with the 2017, 2018, and 2019
enrollee-level EDGE data. Consistent
with the approach outlined in the 2020
Payment Notice to no longer rely upon
MarketScan® data for recalibrating the
risk adjustment models, we will
recalibrate the risk adjustment models
for the 2023 benefit year using only
enrollee-level EDGE data, and we will
continue to use blended, or averaged,
coefficients from the 3 years of
separately solved models for the 2023
benefit year model recalibration.48
Additionally, as outlined in the 2022
Payment Notice, we will use the 3 most
recent consecutive years of enrolleelevel EDGE data that are available at the
time we incorporate the data in the draft
recalibrated coefficients published in
the proposed rule for the applicable
benefit year,49 and will not update the
coefficients between the proposed and
final rules if an additional year of
enrollee-level EDGE data becomes
available for incorporation.50 We
believe this promotes stability, better
meets the goal of the risk adjustment
program, and allows issuers more time
to incorporate this information when
pricing their plans for the upcoming
benefit year.
As such, we propose to determine
coefficients for the 2023 benefit year
based on a blend of separately solved
coefficients from the 2017, 2018, and
2019 benefit years’ enrollee-level EDGE
data.51 The draft coefficients listed in
Tables 1 through 6 reflect the use of
2017, 2018, and 2019 benefit year
enrollee-level EDGE data, as well as
other risk adjustment model updates
proposed in this proposed rule
(including changes to the model
specifications, the pricing adjustment to
Hepatitis C drugs, and the removal of
48 84
FR 17463 through 17466.
we do receive the next year of enrolleelevel EDGE data prior to the proposed rule, that
data must go through several quality and analysis
checks before it is useable for risk adjustment
model recalibration.
50 86 FR 24140 at 24152.
51 As discussed later in this proposed rule, we
propose to remove the mapping of
hydroxychloroquine to RXC 09 (Immune
Suppressants and Immunomodulators) and the
related RXC 09 interactions.
49 While
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the mapping of hydroxychloroquine
sulfate to an RXC). However, we note
that the coefficients could change if we
identify an error or if some or all of the
proposed model changes are not
finalized or are modified in response to
comments. In addition, consistent with
§ 153.320(b)(1)(i), if we are unable to
finalize the final coefficients in time for
publication in the final rule, we would
publish the final coefficients for the
2023 benefit year in guidance soon after
the publication of the final rule. We
seek comment on the proposal to
determine 2023 benefit year coefficients
based on a blend of separately solved
coefficients from the 2017, 2018, and
2019 enrollee-level EDGE data.
We also solicit comments on the
future use of the 2020 enrollee-level
EDGE data due to the COVID–19 PHE.
Under current policy, 2020 enrolleelevel EDGE data would be used in
recalibration of the HHS risk adjustment
models for the 2024 benefit year and
that data would continue to be used for
the 2025 and 2026 benefit year
models.52 Although HHS has not
analyzed the 2020 enrollee-level EDGE
data yet, we solicit comment on the
future use of the 2020 enrollee-level
EDGE data for the annual recalibration
of the HHS risk adjustment models.
b. Risk Adjustment Model Updates
Beginning with the 2023 benefit year,
we are proposing three modeling
updates to the risk adjustment models.
Consistent with the potential model
updates discussed in the 2021 RA
Technical Paper, we propose the
following model updates, which are the
same as those proposed but not
finalized in the 2022 Payment Notice: 53
(1) Adding a two-stage weighted model
specification to the adult and child
models; (2) removing the severity illness
factors in the adult models and
52 Consistent with the approach finalized in the
2022 Payment Notice, use of the 3 most recent
consecutive years of enrollee-level EDGE data
would result in the use of 2018, 2019, and 2020
enrollee-level EDGE data for the recalibration of the
2024 benefit year models; the use of 2019, 2020,
and 2021 enrollee-level EDGE data for recalibration
of the 2025 benefit year models; and the use of
2020, 2021, and 2022 enrollee-level EDGE data for
recalibration of the 2026 benefit year models.
53 See 85 FR 78572 at 78583–78586. In the 2022
Payment Notice Final Rule, in response to
comments, we did not finalize the proposed
updates and announced that we would publish a
technical paper on the proposed model changes; see
86 FR 24140 at 24151–24162. See also the 2021
HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes, available at https://
www.cms.gov/files/document/2021-ra-technicalpaper.pdf and the HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes:
Summary Results for Transfer Simulations,
available at https://www.cms.gov/CCIIO/Programsand-Initiatives/Premium-Stabilization-Programs.
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replacing them with new severity and
transplant indicators interacted with
HCC count factors in the adult and child
models; and (3) replacing the current
enrollment duration factors in the adult
models with HCC-contingent enrollment
duration factors in the adult models.
As described in prior rulemakings and
in the 2021 RA Technical Paper, the
current HHS–HCC models, which are
linear models, underpredict plan
liability for enrollees without HCCs and
the lowest expected expenditures,
underpredict plan liability for enrollees
with the highest HCC counts and the
highest expected expenditures, and
underpredict plan liability for partialyear enrollees with HCCs.54 The
proposals in this proposed rule are
intended to improve the risk adjustment
adult and child models’ prediction for
these subpopulations. We released the
2021 RA Technical Paper in response to
stakeholder requests for more
information on the impacts of these
proposals before they were adopted and
released simulated transfer estimates
reflecting the combination of these
proposed changes in December 2021.55
We continue to believe the combination
of these proposed model changes will
improve the current models’ predictive
accuracy for the lowest-risk enrollees,
certain partial-year adult enrollees, and
the very highest-risk enrollees, while
limiting trade-offs in other areas of
model performance and complexity. As
such, we are re-proposing these
combined model specification changes
in this rule, and the following sections
describe these proposed model
specification changes in detail.
TKELLEY on DSK125TN23PROD with PROP2
i. Two-Stage Weighted Model
Specification
We propose to use a two-stage
weighted model specification to
recalibrate the adult and child risk
adjustment models starting with the
2023 benefit year to improve the
underprediction of plan liability for the
lowest-risk enrollees (that is, enrollees
in low risk deciles and enrollees
54 See, for example, 85 FR 29164 at 29188–29190;
85 FR 78572 at 78583–78586; and 86 FR 24140 at
24151–24162. See also the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
55 See the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes,
available at https://www.cms.gov/files/document/
2021-ra-technical-paper.pdf and the HHS-Operated
Risk Adjustment Technical Paper on Possible
Model Changes: Summary Results for Transfer
Simulations, available at https://www.cms.gov/
CCIIO/Programs-and-Initiatives/PremiumStabilization-Programs. Issuers that participated in
the simulation also received issuer-specific data,
including risk score and transfer estimates for the
simulated results.
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without HCCs).56 Since approximately
80 percent of enrollees in the individual
and small group (or merged) markets do
not have HCCs, this underprediction,
while small in magnitude, represents a
large number of enrollees.57
To improve prediction for the lowestrisk enrollees, we explored calibrating
the adult and child models in two stages
to reweight the healthier enrollees more
heavily. In the first-stage estimation, the
model coefficients would be estimated
using the current model specifications;
and in the second stage, we would reestimate the model weighting enrollees
in the recalibration sample by the
capped reciprocal of the predicted
values of relative expenditures from the
first step estimation with the same
model specification. More specifically,
the first stage of this proposed weighted
estimation method for the adult models
involves a linear regression (weighted
by the person-specific eligibility fraction
of the number of months enrolled
divided by 12) of simulated plan
liability 58 on age-sex factors, payment
HCC factors, severity illness factors,59
the enrollment duration factors,60 and
RXCs. For the child models, the first
stage of the proposed weighted
estimation method involves a linear
regression of simulated plan liability on
age-sex factors and payment HCC
factors.61 The methodology for
conducting the proposed first stage
regression would be essentially
identical to the current adult and child
risk adjustment recalibrations. The
second stage of the proposed two-stage
weighted model specification involves
using recalibration sample enrollees’
inverse (also referred to as reciprocal)
capped predictions from the first stage
56 When we refer to the enrollees without HCCs,
we are referring to enrollees without payment
HCCs.
57 See Chapter 2 of the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf, and the
HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes: Summary Results for
Transfer Simulations, available at https://
www.cms.gov/CCIIO/Programs-and-Initiatives/
Premium-Stabilization-Programs.
58 We simulate plan liability expenditures for
each metal level for each enrollee in the
recalibration dataset (that is, we apply different
standardized benefit design parameters to the same
sample for each metal level). See https://
www.cms.gov/mmrr/Downloads/MMRR2014_004_
03_a03.pdf.
59 We are also proposing to remove the current
severity illness indicators in the adult models and
add new severity and transplant indicators
interacted with HCC count factors in the adult and
child models, as described elsewhere in this
proposed rule.
60 We are also proposing to modify the enrollment
duration factors in the adult models, as described
elsewhere in this proposed rule.
61 See supra note 58.
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as weights for a second linear
regression. As such, this step has the
material effect of weighting healthier
enrollees more heavily so that the
statistical model predicts their
expenditures more accurately. It also
systematically reduces the influence of
very expensive enrollees on the final
model factors.
To help provide stability to the
proposed two-stage weighted model
specification, we imposed lower and
upper bound caps on the first-stage
predictions at the 2.5th and 97.5th
percentiles in the adult models, and the
2.5th and 99.5th percentiles in the child
models. This capped weighted approach
avoids excessively large or small
weights for any observations for the
second stage estimation, and therefore
mitigates the potential to underpredict
at the high end for expensive enrollees,
as well as any possible low-end
overprediction of healthier enrollees.
We tested various caps for the weights
based on the distribution of costs and
found these lower and upper bound
caps achieved better prediction on
average.62
Additionally, in our consideration of
the two-stage weighted model
specification, we tested various methods
of determining weights for the second
stage, including reciprocals of the
square root of predictions, log of
predictions, and residuals from the first
stage estimation, but the reciprocal of
the capped predictions from the first
stage resulted in better predictive ratios
for low-cost enrollees compared to any
of these alternative weighting
functions.63
Our conceptual reasoning for
pursuing the two-stage weighted model
specification is to retain the simple
linear, additive structure of the current
models while forcing the model to better
predict lowest-risk enrollees, who our
analyses identified as underpredicted in
the current adult and child models.
Based on analyses using 2018 enrolleelevel EDGE data, the two-stage weighted
approach significantly improves the
predictive ratios (PRs) of the lower
deciles and the PRs for enrollees
without HCCs compared to the current
models.64 Similar results were also seen
when using 2016 and 2017 enrollee62 See Section 2.2 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf. Also see 85
FR at 78667 and 86 FR at 24283.
63 Ibid.
64 See Figure 2.2 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
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TKELLEY on DSK125TN23PROD with PROP2
level EDGE data.65 In addition, the twostage weighted approach eliminated the
overprediction observed in risk decile
8.66 We also found that the two-stage
weighted approach did not
meaningfully change factor coefficients
for most HCCs, providing stability to the
risk adjustment model factors.
At the same time, we also considered
whether the two-stage weighted
approach worsens the fit of the models
along other dimensions, identifying
three areas that had minor, negative
impacts on the model fit. First, the twostage weighted approach predicts plan
liability by age-sex factor less accurately
than the current models, especially for
younger and older women. Overall, we
considered this to be an acceptable
trade-off, because across all age and sex
factors, most PRs were within a
tolerable threshold of +/¥5 percent (for
example, 0.95 to 1.05), and the twostage weighted approach has the major
benefit of more accurately predicting the
age-sex factors for the enrollees without
HCCs, which is a much larger
population than enrollees with HCCs.
Second, the two-stage weighted
approach is somewhat less accurate at
predicting certain HCCs, with the twostage weighted approach worsening
adult model silver plan PRs by at least
5 percentage points for 14 (out of 91)
ungrouped HCCs and 3 (out of 18)
grouped HCCs. For the vast majority of
HCCs, the impact is very small and most
affected HCCs or HCC groups have small
sample sizes.67 Again, we considered
this reduced accuracy to be an
acceptable trade-off because most of the
65 The PRs calculated in the 2021 RA Technical
Paper are calculated using the same samples on
which the models were calibrated. However, as is
common practice in evaluating model fit, we also
tested splitting the sample for calibration and
validation purposes and the results were
unchanged. Further, for purposes of the analysis in
the 2021 RA Technical Paper, we calculated PRs for
at least three data years and the results always
appear the same. We therefore generally only
reported results in the 2021 RA Technical Paper
from the 2018 data year, which was the most
recently available dataset at the time that we ran
these analyses in preparation for announcing the
proposed model changes in the proposed 2022
Payment Notice.
66 See Figure 2.2 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
67 For example, only one HCC or HCC group
whose PR was identified in our analysis as
worsening by at least 5 percentage points was
present in greater than 1 percent of the adult silver
plan enrollees in the 2018 enrollee-level EDGE
dataset (HCC 142 Specified Heart Arrhythmias).
Our analysis found that all other HCCs had
recalibration dataset frequencies of less than 0.5
percent of enrollees. See Chapter 2.3 and Table 2.1
in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes,
available at https://www.cms.gov/files/document/
2021-ra-technical-paper.pdf.
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PRs for the two-stage weighted approach
were within a tolerable threshold of
+/¥5 percent (for example, 0.95 to
1.05), most enrollees do not have HCCs,
and the two-stage weighted approach
predicts plan liability better for those no
HCC enrollees. Third, the two-stage
weighted approach had lower R-squared
values compared to the current models.
However, the decrease in R-squared is at
most 0.1 percentage points for all metal
levels, which is a minor reduction in fit
across models.68 Similar to the
worsening of the age-sex cell and the
HCC PRs, we were not concerned about
the lower R-squared as the reduction in
fit was minor at all metal levels, the
values remained within the range of Rsquared statistics of other concurrent
models predicting expenditures for
commercial insurance enrollees,69 and
the proposed two-stage weighted model
specification better predicts plan
liability for enrollees with no HCCs,
which is the majority of enrollees. After
considering the impact of the approach
on model performance, we determined
that the proposed two-stage weighted
model specification does not have
material unintended consequences in
model performance and achieves the
aim of improving the predictive
accuracy of the current adult and child
models for enrollees in the lowest risk
deciles and for enrollees without HCCs.
For these reasons, we believe that the
two-stage weighted approach can
improve prediction for lowest-risk
enrollees with limited trade-offs in other
parts of the models’ performance.
Therefore, we are proposing to add the
two-stage weighted model specification
to the adult and child models beginning
with the 2023 benefit year in
combination with the proposed
interacted HCC counts model
specification and the updated adult
model enrollment duration factors
described later in this proposed rule.
In the 2021 RA Technical Paper, we
explained that we believe that by
addressing the underprediction of costs
associated with lowest-risk enrollees in
the adult and child models, we could
further encourage the retention and
offering of plans that enroll a higher
proportion of this subpopulation of
enrollees. We believe issuers offering
these types of plans are at greater risk
of exiting the market if transfers
calculated under the state payment
68 See Figure 2.6 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
69 See Winkelman, R., & Mehmud, S. (2007). A
Comparative Analysis of Claims-Based Tools for
Health Risk Assessment. Schaumberg, IL: Society of
Actuaries.
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transfer formula undercompensate for
the true plan liability of the lowest-risk
enrollees. We received stakeholder
comments in this regard, noting that the
underprediction of the lowest-risk
enrollees could disincentivize issuers
from attracting healthy enrollees to their
plans, thereby undermining the goals of
developing a healthy and stable market
and encouraging competition on the
basis of high quality rather than risk
selection. However, other stakeholders
have questioned if we should focus
model changes on improving prediction
for the lowest-risk enrollees when the
risk adjustment program is intended to
reduce incentives for issuers to avoid
enrolling individuals with higher risk.
We also received comments
concerned that the two-stage weighted
model would be redundant of other
elements in the state payment transfer
formula, which stated that the
administrative cost adjustment to
statewide average premium 70 already
addresses some of the underprediction
of the lowest-risk enrollees in the risk
adjustment models. We clarify that the
proposed two-stage weighted model
specification and existing
administrative cost adjustment to
statewide average premium are not
redundant and address separate
considerations. As detailed in the 2018
Payment Notice, the purpose of the
administrative cost adjustment to
statewide average premium is to
exclude fixed administrative costs that
are not dependent on enrollee risk, such
as taxes.71 In contrast, and as previously
described elsewhere,72 the purpose of
the proposed two-stage weighed model
specification is to improve the current
adult and child models’ prediction for
the lowest risk enrollees.
We seek comment on the two-stage
weighted model specification proposal,
specifically regarding whether we
should implement the proposed twostage weighted model specification
alone, independent of the other
proposed model specification changes
outlined in this rule, beginning with the
2023 benefit year; whether we should
implement the proposed two-stage
weighted model specification in
conjunction with these other proposals;
or whether we should not implement
the two-stage weighted model
specification at all. Additionally, given
the stakeholder comments we received
70 81
FR at 94099–94100.
81 FR at 61488–61489. Also see 81 FR at
94099–94100.
72 See Section 2.2 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf. Also see 85
FR at 78667 and 86 FR at 24283.
71 See
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questioning the need for this type of
model update, we also generally solicit
comments on whether we should seek
to improve the current models’
prediction for the lowest-risk enrollees.
TKELLEY on DSK125TN23PROD with PROP2
ii. Interacted HCC Counts Model
Specification
In addition to the two-stage weighted
approach, we are proposing to add an
interacted HCC counts model
specification to the adult and child risk
adjustment models starting with the
2023 benefit year to address the current
models’ underprediction of plan
liability for the very highest-risk
enrollees (that is, those in the top risk
percentile and those enrollees with the
most HCCs). While this highest-risk
subpopulation represents a small
number of enrollees, it represents a large
portion of expenditures. As described in
the 2021 RA Technical Paper, enrollees
in risk decile 10 represent roughly 74.29
percent of actual plan liability,
compared to only 1.36 percent for
enrollees in risk decile 1.73 We found
that for enrollees with a high HCC
count, there is an increasing, non-linear
effect that leads to higher costs than are
currently predicted by adding up the
incremental effects of each HCC.
Therefore, to address the
underprediction of the highest-cost
enrollees, we explored the addition of
severity and transplant factors
interacted with HCC counts in the adult
and child models, wherein a factor
flagging the presence of at least one
severe or transplant payment HCC is
interacted with counts of the enrollee’s
payment HCCs.74 The purpose of adding
severity and transplant factors
interacted with HCC count factors to the
adult and child models is to address the
underprediction of the highest risk
enrollees (as the proposed two-stageweighted model specification addresses
the underprediction of the healthiest
enrollees) by accounting for the fact that
costs of certain HCCs rise significantly
when they occur with multiple other
HCCs. Specifically, the goals of this
approach were to:
1. Address the non-linearity in costs
between enrollees without HCCs or with
73 See Table 4.1 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
74 For HCCs in a coefficient estimation group, the
group is counted at most once. These groups of
HCCs in the HHS risk adjustment adult and child
models are detailed in the HHS-Developed Risk
Adjustment Model Algorithm ‘‘Do It Yourself
(DIY)’’ Software ‘‘Additional Adult Variables’’ and
‘‘Additional Child Variables’’ table logic (Tables 6
and 7 in the 2021 Benefit Year DIY Software). The
August 3, 2021 version of the DIY software is
available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance.
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very low costs and enrollees with
multiple HCCs or with high costs;
2. Empirically incorporate the cost
impact of multiple complex diseases;
and
3. Reduce incentives for coding
proliferation to mitigate the gaming
concerns with HCC counts models.
In developing this interacted HCC
counts approach, we identified common
HCCs for enrollees with extremely high
costs, as well as HCCs that were being
underpredicted in the current risk
adjustment adult and child models. We
found that many of the HCCs that were
flagged as being underpredicted were
the current severe illness HCCs, the
transplant HCCs, and other HCCs
related to the severity of disease.
Therefore, we considered dropping the
current severity illness factors in the
adult models and replacing them with
severity and transplant factors
interacted with HCC count factors in the
adult models, as well as adding the
severity and transplant factors
interacted with HCC count factors to the
child models.
We propose the inclusion of the
factors in Tables 1 and 2 as the
interacted severity and transplant
factors in the adult and child models
starting with the 2023 benefit year. We
separated out transplant HCCs and
severity HCCs into their own separate
set of interacted factors, as expressed in
Tables 1 and 2, because we found that
this approach improved prediction for
high-cost enrollees better than an
approach that combined severity and
transplant HCCs into a single set of
factors. Furthermore, under the current
risk adjustment models, adult severity
illness interaction factors are collapsed
into a single binary variable indicating
the presence of any severity illness
interaction. In contrast, the proposed
severity factors would not be collapsed
and would instead be separated out by
the HCC count with which the severity
or transplant illness indicator was
interacted.
We defined the new proposed
interaction factors such that an enrollee
would receive one or more of these
factors if they had any HCCs in the
severity or transplant indicator groups
in Table 3 and according to how many
HCCs were recorded in the enrollee’s
data in total. As such, the proposed
severity and transplant interaction
factors would express the presence of
one or more of the selected severity or
transplant HCCs in Table 3. That is, an
enrollee must have at least one HCC in
the ‘‘severity’’ or ‘‘transplant’’ indicator
groups in Table 3 to receive the
interacted HCC count factor toward
their risk score, but would not receive
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601
any additional flags for having more
than one of the ‘‘severity’’ or
‘‘transplant’’ HCCs in an indicator group
beyond the total HCC count.
The proposed severity-HCC-countinteraction factors were calculated as 10
separate factors for the adult models,
and seven separate factors for the child
models. In the adult models, the first
nine factors specified the presence of (1)
an HCC in the severity list in Table 3
and (2) exactly one payment HCC in the
enrollee’s data, exactly two, exactly
three, and so on, up to exactly nine
payment HCCs. The tenth factor
specified the presence of (1) an HCC in
the severity list in Table 3 and (2) ten
or more payment HCCs in the enrollee’s
data. For the child models, the first five
factors represented the presence of (1)
an HCC in the severity list in Table 3
and (2) exactly one payment HCC in the
enrollee’s data, exactly two, exactly
three, and so on, but the sixth factor
represents the presence of (1) an HCC in
the severity list in Table 3 and (2) six
to seven payment HCCs, and the
seventh factor represents the presence of
(1) an HCC in the severity list in Table
3 and (2) eight or more payment HCCs
in the enrollee’s data.
The proposed transplant-HCC-countinteraction factors were calculated
similarly. However, the transplant
factors were calculated using a different
range of HCC counts. In the adult
models, five separate transplant
interaction factors were created,
representing the presence of (1) an HCC
in the transplant list in Table 3 and (2)
payment HCC counts of exactly four,
exactly five, exactly six, exactly seven,
and eight or more payment HCCs in the
enrollee’s data. For the child models, we
created only one transplant interaction
factor indicating the presence of (1) an
HCC in the transplant list in Table 3 and
(2) a total of four or more payment HCCs
in the enrollee’s data. As detailed later
in this section, this treatment of
transplant-HCC-count-interaction
factors stabilized the child model
estimates by increasing the sample size
used to estimate the factor coefficients.
To illustrate how the proposed
severity- (or transplant-) HCC-countinteraction factors would be assigned to
an enrollee, consider an adult enrollee
with four payment HCCs, one of which
is HCC 34 ‘‘Liver Transplant Status/
Complications’’. Because HCC 34
appears in both the severity and
transplant indicator groups in Table 3,
this enrollee would receive the
following factor coefficients toward
their risk score in the adult models: (1)
The four factor coefficients for their
individual HCCs (the three nontransplant HCC factors and the HCC 34
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transplant HCC factor), (2) the factor
coefficient for the severity-HCC-countinteraction indicating four payment
HCCs, and (3) the factor coefficient for
the transplant-HCC-count-interaction
indicating four payment HCCs.75 The
child model would operate similarly.
For a child enrollee with a transplant
HCC in the transplant factor group and
three other payment HCCs, the
following would be used to calculate the
enrollee’s risk score: (1) The factor
coefficients for all four HCCs (that is,
the three non-transplant HCCs and the
transplant HCC), (2) the factor
coefficient for the severity-HCC-countinteraction indicating four payment
HCCs, and (3) the factor coefficient for
the transplant-HCC-count-interaction
indicating four or more payment HCCs.
To implement the severity- and
transplant-HCC-count-interaction
factors in the regression model and
estimate the value of their factor
coefficients, we are proposing to remove
the current severity illness factors in the
adult models, and add severity- and
transplant-HCC-count-interaction
factors for the adult and child models
beginning with the 2023 benefit year.
Although the severity (or transplant)
HCC-count-interaction factor
coefficients may be estimated as having
negative values, the combination of
these interaction factor coefficients with
the factor coefficient of the HCC that
triggered the severity factor will always
be positive. For example, the proposed
adult silver metal level model factor
coefficient for Viral or Unspecified
Meningitis (HCC 04), which is proposed
as a severe illness HCC, is 6.914, when
combined with the proposed severityHCC-count-interaction factor coefficient
for one HCC of ¥4.603 (indicating that
the enrollee only has HCC 04 present in
their data), would increase the
enrollee’s risk score by 2.311. Moreover,
an increase in the count of HCCs would
lead to a monotonic increase in the
enrollee risk score, because the severityHCC-count-interaction factor
coefficients are less negative (and
sometimes positive) with a larger
number of payment HCCs.
One potential concern with this
proposed model specification change is
that the severity- and transplant-HCCcount-interaction factor coefficients
might be based on small sample sizes.
In recognition of this issue, we
considered sample sizes of the various
interacted HCC count factors when
developing this proposal and the
75 This is in addition to other factors that the
adult enrollee has that are used to calculate their
risk score (such as the applicable demographic
factors, RXCs (if any), and the applicable
enrollment duration factors).
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proposed factor coefficients. We
explored alternative methods of
interacting HCC counts with severity
and transplant HCCs, including
interacting the HCC counts with
individual selected severity and
transplant HCCs, but found that
interacting the HCC counts with a factor
indicating the presence of at least one of
the selected HCCs in each group
produced PR improvements and
sufficient sample sizes for reasonably
stable factor coefficient estimates. To
that end, we analyzed 2016, 2017, and
2018 enrollee-level EDGE data and
chose the model specifications that
grouped the HCC counts interacted with
individual severity and transplant HCCs
into two sets of aggregated factors to
maximize sample size, reduce concerns
of overfitting the model, and reduce the
number of factors being added to the
models. More specifically, in the adult
models, we found that starting with 4+
HCCs for the transplant interacted
factors improved predictions of
enrollees at the very high end in terms
of risk and cost and ending at 8+ HCCs
for the transplant interacted factors,
instead of 10+ HCCs, addressed the
small sample sizes of enrollees with a
transplant and 9 or more HCCs. For the
child models, we found having one
transplant interacted factor for 4+ HCCs
provided more stable estimates given
the smaller sample sizes for children
than those for adults. With the proposed
structure for transplant and severity
interacted factors in place, the resulting
sample sizes for both proposed sets of
factors in the child and adult models in
the proposed 2022 Payment Notice and
in this rule are consistent with the
sample sizes used for individual HCCs
in the adult and child risk adjustment
models.
We also considered potential gaming
concerns in developing the proposed
interacted HCC counts factors. We
believe that the proposal to restrict the
incremental risk score adjustment to
enrollees with at least one severe illness
HCC, which accounts for less than 2
percent of the adult enrollee-level EDGE
data population across the 2016, 2017,
and 2018 benefit years, helps mitigate
the concern that issuers may attempt to
inflate HCC counts to influence their
transfers under the state payment
transfer formula. In other words, the
scope for potentially inflating HCC
coding frequency under this proposal
would be limited to a small fraction of
total enrollees, in contrast to an
approach that would interact HCC
counts for any payment HCC, where a
payment HCC is present in
approximately 20 percent of the adult
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enrollee population across the same
three benefit years of enrollee-level
EDGE data.76 We also note that enrollees
with interacted HCCs are likely to have
more HCCs and higher risk scores and
therefore are more likely to be sampled
and have their risk scores reviewed in
the HHS-operated risk adjustment data
validation (HHS–RADV) process due to
our use of stratified sampling and
application of the Neyman allocation.77
Our analysis of the proposed
interacted HCC counts factors combined
with the proposed HCC-contingent
enrollment duration factors in the adult
models (discussed in the following
section) significantly improves
predictions across most deciles and
HCC counts for the very highest-risk
enrollees, as well as the lowest-risk
enrollees without HCCs. Specifically, as
described in the 2021 RA Technical
Paper, the proposed interacted HCC
counts approach improves the PRs for
enrollees across most HCC counts, with
significant improvements for enrollees
with high numbers of HCCs (greater
than 6).78 The proposed interacted HCC
counts approach also demonstrated
improved R-squared statistics across all
metal levels in the adult and child
models using 2016, 2017, and 2018
enrollee-level EDGE data.79
Some commenters on the 2021 RA
Technical Paper were concerned about
potential data bias because of the
exclusion of enrollees with capitated
claims from the analytic sample used to
test the model specification changes. As
previously stated in the 2016 RA White
Paper,80 we have historically excluded
enrollees with capitated claims from the
recalibration sample due to concerns
that methods for computing and
reporting derived amounts from
capitated claims would not result in
76 This analysis was based on 2016, 2017, and
2018 enrollee-level EDGE data. See Chapter 4.2 in
the 2021 HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes, available at
https://www.cms.gov/files/document/2021-ratechnical-paper.pdf.
77 For a discussion of our use of stratified
sampling and application of the Neyman allocation,
see 79 FR at 13756–13758; and 84 FR at 17494–
17495.
78 See Figure 4.3 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
79 See Figure 4.4 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
80 See the March 2016 Risk Adjustment
Methodology White Paper (March 24, 2016),
available at https://www.cms.gov/CCIIO/Resources/
Forms-Reports-and-Other-Resources/Downloads/
RA-March-31-White-Paper-032416.pdf.
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reliable data for recalibration or
analysis.81
Beyond the predictive improvements,
an additional benefit of the proposed
interacted HCC count model
specification is that it would not
overhaul the existing risk adjustment
factors and would instead build upon
the current models. Additionally, the
factors would remain fairly stable, could
be used in combination with other
refinements and model updates, and
could be easily modified, adjusted,
expanded, or constrained in the future
to include additional HCCs or to remove
HCCs. For all of these reasons, we are
proposing to add the proposed
interacted HCC counts model
specification as outlined above to the
adult and child risk adjustment models
beginning with the 2023 benefit year.
We seek comment on this proposal,
specifically regarding whether we
should implement the proposed
interacted HCC counts model
specification alone, independent of the
other proposed model specification
changes outlined in this rule, beginning
with the 2023 benefit year; whether we
should implement the proposed
interacted HCC counts model
specification in conjunction with these
other proposals; or whether we should
not implement the proposed interacted
HCC counts model specification at all.
We also seek comment on the variations
on the HCC counts model specification
discussed in this section, including
whether we should interact severity or
transplant factors with individual HCCs,
or should interact HCC counts with
individual selected severity and
transplant HCCs, rather than interacting
HCC counts with only an indicator of
the presence of severity or transplant
HCCs, as proposed. Finally, we seek
comment on the proposed list of
severity and transplant HCCs in Table 3
that would be used to calculate the
proposed interacted HCC count factor
coefficients and whether other HCCs
should be to added to the proposed list
that trigger the interacted HCC count
factor coefficients or whether any of the
HCCs on the proposed list should be
removed.
TKELLEY on DSK125TN23PROD with PROP2
iii. Changes to the Adult Model
Enrollment Duration Factors 82
In addition to the proposed two-stage
weighted model specification and the
81 See Chapter 1.4 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
82 As explained in the 2021 Payment Notice
proposed rule, we found that partial year enrollees
in the child models did not have the same risk
differences as partial year enrollees in the adult
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interacted HCC counts model
specification, we are also proposing to
change the enrollment duration factors
in the adult risk adjustment models to
improve the prediction for partial-year
adult enrollees with and without HCCs.
Although the value for the factors
change from year to year as part of the
annual recalibration of the adult
models, we have not made changes to
the structure of the enrollment duration
factors since they were first adopted for
the 2017 benefit year. To develop the
current enrollment duration factors for
the adult models, we reviewed the
annualized predicted expenditures,
actual expenditures, and PRs by
enrollment duration groups (for each: 1
month, 2 months, and so on up to 12
months) for our risk adjustment
concurrent modeling sample, which was
made up of adults in the 2014
MarketScan® data.83 This analysis
found that actuarial risk for adult
enrollees with short enrollment periods
tended to be underpredicted in our
methodology, and actuarial risk for
adult enrollees with full enrollment
periods (12 months) tended to be
overpredicted. We therefore proposed
and finalized in the 2018 Payment
Notice that, beginning for the 2017
benefit year, the adult models would
include enrollment duration factors that
apply to all adults with partial-year
enrollment.84 The value for the
enrollment duration factors have
generally decreased since they were first
introduced in the adult models for the
2017 benefit year, reflecting a reduced
impact of enrollment duration on risk
scores of partial year enrollees. After a
slight increase between 2017 and 2018,
the factors have decreased significantly
from 2018 to 2021, and in some cases
(the 10- and 11-month factors) the
factors are now 0.000, relative to a 12month enrollment baseline.85
models and they tended to have similar risk to full
year enrollees in the child models. See 85 FR 7103–
7104. In the infant models, we found that partial
year infants had higher expenditures on average
compared to their full year counterparts; however,
the incorporation of enrollment duration factors
created interaction issues with the current severity
and maturity factors and did not have a meaningful
impact on the general predictive accuracy of the
infant models. Ibid. We therefore propose to
continue to apply enrollment duration factors to the
adult models only.
83 See pages 35–39 of the March 2016 Risk
Adjustment Methodology White Paper (March 24,
2016), available at https://www.cms.gov/CCIIO/
Resources/Forms-Reports-and-Other-Resources/
Downloads/RA-March-31-White-Paper-032416.pdf.
84 81 FR 94058 at 94071–94074.
85 In unconstrained models, these factors are
negative; therefore, we constrained them to zero
because we do not believe negative enrollment
duration factors are appropriate, as this would
create inappropriate incentives. See Figure 3.1 in
the 2021 HHS-Operated Risk Adjustment Technical
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603
As described in prior rulemakings and
the 2021 RA Technical Paper, we have
been considering potential adjustments
to the enrollment duration factors and
our more recent analysis of enrolleelevel EDGE data found that the current
adult model enrollment duration factors
underpredicted plan liability for partialyear adult enrollees with HCCs and
overpredicted plan liability for partialyear adult enrollees without HCCs.86 87
More specifically, our analysis of 2017
and 2018 enrollee-level EDGE data
found that the current enrollment
duration factors are driven by enrollees
with HCCs.88 That is, partial-year
enrollees with HCCs had higher per
member, per month (PMPM)
expenditures on average as compared to
full-year enrollees with HCCs, and
partial-year enrollees without HCCs
were not significantly different in
PMPM expenditures compared to fullyear enrollees without HCCs.89
Therefore, beginning with the 2023
benefit year, we are proposing to
eliminate the current monthly
enrollment duration factors of up to 11
months for all enrollees in the adult
models, and replace them with new
monthly enrollment duration factors of
up to 6 months that would apply only
to adult enrollees with HCCs. If
finalized as proposed, this would mean
there would be no enrollment duration
factors for adult enrollees without HCCs
starting with the 2023 benefit year nor
would there be enrollment duration
factors for adult enrollees with HCCs
and more than 6 months of enrollment.
While we considered other
enrollment duration factor structures,
we are proposing to limit the enrollment
duration factors to 6 months because we
found that the monthly average cost
variation by number of months enrolled
is meaningfully reduced after 6 months
for adult enrollees with HCCs, and
enrollment duration factors beyond 6
months did not meaningfully improve
Paper on Possible Model Changes, available at
https://www.cms.gov/files/document/2021-ratechnical-paper.pdf.
86 See 85 FR 29164 at 29188–29190.; 86 FR 24140
at 24151–24162.; and the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
87 When we refer to the enrollees with and
without HCCs, we are referring to enrollees without
payment HCCs.
88 See, for example, Chapters 1.4 and 3.2 of the
2021 HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes, available at
https://www.cms.gov/files/document/2021-ratechnical-paper.pdf. Also see 85 FR at 7103–7104
and 85 FR at 78585–78586.
89 See Chapter 1.4 of the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
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prediction for the adult models. As part
of our analysis of enrollment duration
factor options, we also considered
adoption of enrollment duration factors
by market, but we did not find a
meaningful distinction in relative costs
between markets on average once we
implemented the proposed enrollment
duration factors of up to 6 months for
adult enrollees with HCCs.90 We also
considered HCC-type contingent
enrollment duration factors.
Specifically, we found that the
distribution of enrollment duration and
PMPM allowed charges by enrollment
duration is similar for adults with any
acute HCCs versus adults with only
chronic HCCs.91 We therefore
determined that, on balance, it would
add unnecessary complexity to
introduce enrollment duration factors
by market type or that are contingent on
types of HCCs with little benefit.
Therefore, we are not proposing
enrollment duration factors for the adult
models by market type or that are
contingent on types of HCCs at this
time.
We also considered previous
comments we received that expressed
concerns that certain issuers—
particularly small group market issuers,
small issuers, or Medicaid issuers—may
have partial-year enrollees with HCCs
that are not coded. These commenters
expressed concerns that these issuers
may have difficulty obtaining diagnoses
for these enrollees, creating cases where
the issuer may pay claims, and incur
costs, for services associated with a
condition for the partial-year enrollee,
but the issuer’s limited time with the
partial-year enrollee may not be
adequate to capture the diagnosis code
associated with the HCC.92 93 In
response to the 2021 RA Technical
Paper, we got further comment from
stakeholders who questioned whether
the HCC-contingent enrollment duration
90 See Chapter 3.3.2 of the 2021 HHS-Operated
Risk Adjustment Technical Paper on Possible
Model Changes, available at https://www.cms.gov/
files/document/2021-ra-technical-paper.pdf.
91 See Chapter 3.3.3 of the 2021 HHS-Operated
Risk Adjustment Technical Paper on Possible
Model Changes, available at https://www.cms.gov/
files/document/2021-ra-technical-paper.pdf.
92 See Chapter 3.4 of the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
93 This issue differs from situations where issuers
may not have a complete diagnostic profile for a
partial-year enrollee because the services received
were not related to the diagnoses that were not
captured. For example, if an enrollee received
services due to a condition while enrolled with a
different issuer, then the current issuer may not
have all diagnosis codes for a partial-year enrollee.
However, such cases do not have cost implications
for the current issuer since the partial-year enrollee
received no services associated with that diagnosis.
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In sum, we are proposing to modify
the HHS risk adjustment model
specifications for the adult and child
models beginning with the 2023 benefit
year by combining a two-stage weighted
approach with the removal of the
current adult model severe illness
interaction factors and the addition of
new severe illness and transplant
interacted HCC count factors to the
adult and child models. We are also
proposing to replace the current
enrollment duration factors in the adult
models. For the two-stage weighted
approach, we propose calibrating the
adult and child models in two stages.
The first stage of the weighted
estimation method would involve a
linear regression of simulated plan
liability on age-sex factors and payment
HCC factors for the adult and child
models, with the addition of RXCs and
the new proposed enrollment duration
factors for the adult models. The second
stage would use the reciprocal of
prediction from the first step to weight
a second stage linear regression. To
stabilize the weights from the first stage
predictions, we propose lower and
upper bound caps on the predictions
used as weights at the 2.5th and 97.5th
percentiles in the adult models and the
2.5th and 99.5th percentiles in the child
models. This two-stage weighted
approach would be combined with the
new severity and transplant indicators
from the interacted HCC count factors.
For the severity indicator group, we
propose to add separate count factors for
one to 10+ payment HCCs (1, 2, . . . ,
10+) for the adult models and one to 5,
6 or 7, and 8+ payment HCCs (1, 2, . . .
5, 6 or 7, 8+) for the child models. The
proposed HCCs that would flag the
severity indicator are listed in Table 3.
For the transplant HCCs, we propose to
incorporate factors for 4 to 8+ payment
HCCs (4, 5, 6, 7, 8+) for the adult models
and one factor for 4+ payment HCCs for
the child models. The proposed HCCs
that would flag the transplant indicator
are listed in Table 3. The severity- (and
transplant-) HCC-count-interaction
factors would be included in both stages
of the regressions. We propose to
incorporate the two-stage weighted
approach and the interacted HCC count
specification updates beginning with
the 2023 benefit year HHS risk
adjustment adult and child models. We
also propose to remove the current
severity illness factors in the adult
models beginning with the 2023 benefit
year. Lastly, we propose to remove the
current 11 enrollment duration factors
for all enrollees in the adult models and
replace them with new monthly
enrollment duration factors of up to 6
months that only apply to enrollees
with HCCs. We propose to incorporate
the new HCC-contingent enrollment
duration factors beginning with the
2023 benefit year adult models.
We tested combining these model
specifications into an approach that
incorporated the two-stage weighted
approach, the severity and transplant
factors interacted with HCC count
factors, and the HCC-contingent
enrollment duration factors. We found
that, together, these changes are
expected to improve model performance
in comparison to the current models.
Our analysis found this combined
approach generally improved prediction
for enrollees at both the low and high
ends of expected expenditures and had
higher R-squared statistics across metal
levels than the current models,
indicating a better individual-level fit.95
Our analysis also found general
improvement in PRs for the models with
the combined proposed model
specification changes across each decile
of predicted plan liability, by age-sex
factor for adult enrollees with and
without HCCs, and by enrollment
94 See Chapter 3.4 of the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
95 See Chapter 5.1 of the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/
document/2021-ra-technical-paper.pdf.
factors would have negative impacts on
small group market issuers that offer
non-calendar year coverage and take on
new business later in the year. As we
noted in the 2021 RA Technical Paper,
our analysis did not find evidence that
issuers are unable to capture costmeaningful HCCs for partial-year
enrollees in the individual or small
group (including merged) market.94
We solicit comments on the proposed
changes to the enrollment duration
factors for the adult models. We also
solicit comments regarding whether we
should implement the proposed changes
to enrollment duration factors alone,
independent of the other proposed
model specification changes outlined in
this rule, beginning with the 2023
benefit year; whether we should
implement the proposed changes to
enrollment duration factors in
conjunction with these other proposals;
or whether we should not implement
the proposed changes to enrollment
duration factors at all and maintain the
current structure for these factors.
iv. Combined Impact of the Proposed
Model Changes
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length.96 We also found that the mean
absolute error did not materially differ
between the current adult and child
models and the proposed adult and
child models with the combined
proposed model specification changes
incorporated.97 These observations
support our belief that the best way to
comprehensively improve the predictive
accuracy of the current models across
the risk spectrum is to implement all
three proposed model specification
changes together. To further assist
issuers and other stakeholders with
analyzing the impact of the combination
of these proposed model specification
changes, HHS also conducted a transfer
simulation and provided summary-level
and issuer-specific risk score and
transfer estimates.98 99
As detailed in the 2021 RA Technical
Paper, this transfer simulation applied
the proposed model specification
changes to 2020 benefit year EDGE data
to illustrate and estimate what 2020
benefit year risk adjustment transfers
would have been if the combined model
specification changes were applied.100
The transfer simulation provided issuers
with detailed, plan-level simulated
results.101 The coefficients values
presented in Tables 1 and 2 incorporate
the combination of these proposed
model specification changes and Table
3 provides the list of the proposed
severity and transplant HCCs that would
apply for the proposed interacted HCC
counts factors. We seek comment on the
combination of these proposed model
changes and the adoption of these
changes beginning with the 2023 benefit
year.
We seek comment on finalizing each
of these proposed model specification
changes as a whole, in part, or in
96 Ibid.
97 Ibid.
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98 See
the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes,
available at https://www.cms.gov/files/document/
2021-ra-technical-paper.pdf. See also the HHSOperated Risk Adjustment Technical Paper on
Possible Model Changes: Summary Results for
Transfer Simulations, available at https://
www.cms.gov/CCIIO/Programs-and-Initiatives/
Premium-Stabilization-Programs. Issuers that
participated in the simulation also received detailed
issuer-specific data, including risk score and
transfer estimates for the simulated results.
99 If an issuer wishes to use the simulation results
to assist in assessing the impact of these model
specification changes on future benefit year transfer
amounts, it should do so with caution and in
combination with other significant data.
100 See Chapter 5.2 of the 2021 HHS-Operated
Risk Adjustment Technical Paper on Possible
Model Changes, available at https://www.cms.gov/
files/document/2021-ra-technical-paper.pdf.
101 See the HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes:
Summary Results for Transfer Simulations,
available at https://www.cms.gov/CCIIO/Programsand-Initiatives/Premium-Stabilization-Programs.
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combination or for example, whether we
should finalize the proposed interaction
HCC counts model specification and the
proposed changes to the adult model
enrollment duration factors without the
proposed two stage weighted model
specification. Finally, we seek comment
on finalizing the 2023 models without
the proposed model specification
changes, but with updates to the data
years used for recalibration, (that is, to
use 2017, 2018, and 2019 enrollee-level
EDGE data, as detailed elsewhere in this
proposed rule); or, alternatively, using
the updated final 2022 risk adjustment
model coefficients 102 for the 2023
benefit year risk adjustment models,
trended forward to project 2023 costs or
not trended forward to project 2023
costs.
c. Pricing Adjustment for the Hepatitis
C Drugs
For the 2023 benefit year, we propose
to continue applying a market pricing
adjustment to the plan liability
associated with Hepatitis C drugs in the
risk adjustment models.103 Since the
2020 benefit year risk adjustment
models, we have been making a market
pricing adjustment to the plan liability
associated with Hepatitis C drugs to
reflect future market pricing prior to
solving for coefficients for the
models.104 This market pricing
adjustment has been necessary to
account for the significant pricing
changes associated with the
introduction of new and generic
Hepatitis C drugs between the data years
used for recalibrating the models and
the applicable recalibration benefit year.
We also continue to be cognizant that
issuers might seek to influence provider
prescribing patterns if a drug claim can
trigger a large increase in an enrollee’s
risk score that is higher than the actual
plan liability of the drug claim, and
therefore, make the transfer results more
favorable for the issuer. We have
committed to reassessing this pricing
adjustment with additional years of
enrollee-level EDGE data, as data
become available. As part of the 2023
benefit year model recalibration, we
reassessed the Hepatitis C RXC using
available enrollee-level EDGE data
(including 2019 benefit year data) to
consider whether the adjustment was
102 See ‘‘Final 2021 Benefit Year Final HHS Risk
Adjustment Model Coefficients.’’ May 12, 2020.
Available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/Final-2021Benefit-Year-Final-HHS-Risk-Adjustment-ModelCoefficients.pdf.
103 See, for example, 84 FR 17463 through 17466.
104 The Hepatitis C drugs market pricing
adjustment to plan liability is applied for all
enrollees taking Hepatitis C drugs in the data used
for recalibration.
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605
still needed and if it is still needed,
whether it should be modified. We
found that the data for the Hepatitis C
RXC that would be used for the 2023
benefit year recalibration (that is, the
2017, 2018, and 2019 enrollee-level
EDGE data) still do not account for the
significant pricing changes due to the
introduction of new Hepatitis C drugs
and, therefore, do not precisely reflect
the average cost of Hepatitis C
treatments applicable to the benefit year
in question.
Specifically, we are proposing to
recalibrate the 2023 benefit year risk
adjustment models with the 2017, 2018,
and 2019 enrollee-level EDGE data.
Generic Hepatitis C drugs did not
become available on the market until
2019.105 Due to the lag between the data
years used to recalibrate the risk
adjustment models and the applicable
benefit year of risk adjustment, we do
not believe that the data used for
recalibrating the models precisely
reflect the average cost of Hepatitis C
treatments expected in the 2023 benefit
year. Therefore, we continue to believe
a market pricing adjustment for the 2023
benefit year is necessary to account for
the significant pricing changes
associated with the introduction of new
and generic Hepatitis C drugs between
the data years used for recalibrating the
models and the applicable recalibration
benefit year. We intend to continue to
assess this pricing adjustment in future
benefit year recalibrations using
additional years of enrollee-level EDGE
data. We seek comment on our proposal
to continue applying a market pricing
adjustment to the plan liability
associated with Hepatitis C drugs for the
2023 benefit year.
d. Risk Adjustment RXC Mapping for
Recalibration
i. Inclusion and Exclusion Criteria for
Drugs in RXC Mapping and
Recalibration
This section provides an overview of
the inclusion and exclusion criteria
HHS uses to identify drugs for mapping
to RXCs in the adult risk adjustment
models, reviews what version of the
RXC mapping document HHS uses
when processing the enrollee-level
EDGE data for a benefit year for
recalibration of the adult risk
adjustment models, and outlines the
criteria that warrant consideration for
changes to the incorporation (or
105 See https://www.gilead.com/news-and-press/
company-statements/authorized-generics-for-hcv.
See also https://news.abbvie.com/news/abbviereceives-us-fda-approval-mavyretglecaprevirpibrentasvir-for-treatment-chronichepatitis-c-in-all-major-genotypes-gt-1-6-in-asshort-as-8-weeks.htm.
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exclusion) of particular drugs from the
RXC mappings in future benefit year
recalibrations. We also propose a change
to the approach for identifying the
version of the RXC mapping document
HHS would use to process a given
benefit year’s enrollee-level EDGE data
for recalibration of the adult risk
adjustment models.
In accordance with § 153.320, HHS
develops and publishes the risk
adjustment methodology applicable in
states where HHS operates the program,
including the draft factors to be
employed in the models for the benefit
year. This includes the annual
recalibration of the adult risk
adjustment models’ RXC coefficients
using data from the applicable prior
benefit years trended forwarded to
reflect the applicable benefit year of risk
adjustment. Drugs that appear on claims
data, either through National Drug
Codes (NDCs) or Healthcare Common
Procedural Coding System (HCPCS), are
cross walked to RxNorm Concept
Unique Identifiers (RXCUIs).106 RXCUI
mappings are always matched to the
NDCs and HCPCS applicable to the
particular EDGE data year as the NDC
and HCPCS reflect the drugs that were
available in the market during the
benefit year.107 Currently, we use the
most recent RXC mappings (RXCUIs
that map to RXCs) that are available
when we first process the enrollee-level
EDGE data for a benefit year for
recalibration of the adult risk
adjustment models. For example, for the
2022 benefit year, we recalibrated the
adult risk adjustment models using
2016, 2017, and 2018 enrollee-level
EDGE data and applied the second
quarter (Q2) 2018 RXC mapping
document for both 2016 and 2017,108
and applied the Q2 2019 mapping
document for 2018 for recalibration of
the adult risk adjustment models RXC
factors.109
106 See,
for example, 81 FR at 94074–94080.
for example, Creation of the 2018 Benefit
Year HHS-Operated Risk Adjustment Models Draft
Prescription Drug (RXCUIs) to HHS Drug Classes
(RXCs) Crosswalk Memorandum at https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/Draft-RxC-Crosswalk-Memo9-18-17.pdf.
108 RXCs were not added to the risk adjustment
models until 2018 benefit year; therefore, we used
2018 RXC mappings for both 2016 and 2017
enrollee-level EDGE data as there were no 2016 and
2017 RXC mapping documents. Note that, even
though 2018 RXC mappings were applied to these
earlier years, they were cross walked to the NDCs
and HCPCS that describe the applicable drugs
during those earlier years.
109 Although the recalibration proposals are
typically released towards the end of the calendar
year, we generally receive the prior benefit year
enrollee-level EDGE data in the summer or fall, at
which point we apply the most recently available
mapping document as we begin to prepare the data
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107 See,
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As noted in the 2022 Payment Notice,
we also continuously assess the
availability of drugs in the market and
the associated mapping of those drugs to
RXCs in the adult risk adjustment
models.110 More specifically, during a
benefit year, HHS conducts quarterly
reviews of RXCUIs that map to RXCs in
the adult risk adjustment models for
that benefit year. During our annual
review of enrollee-level EDGE data for
recalibration purposes, and to a certain
extent during quarterly reviews of
RXCUIs that map to RXCs in the adult
risk adjustment models, HHS evaluates
the inclusion and exclusion of RXCUIs
based on criteria such as: (1) Whether
costs for an individual drug are
comparable to the costs of other drugs
in the same class, (2) whether a drug is
a good predictor of the presence of the
diseases that map to the HCCs that an
RXC indicates (which can be evaluated
through clinical expert review in the
absence of data), (3) whether clinical
expert reviews of the pharmacological
properties and prescribing patterns are
consistent with treatment of a particular
condition, and (4) stakeholder
feedback.111 As a result of this on-going
assessment, we may make quarterly
updates to the RXC Crosswalk, which
identifies the list of NDCs and HCPCS
indicating the presence of an RXC in the
current benefit year DIY and EDGE
reference data, to ensure drugs are
mapped to RXCs, where appropriate.
This can include the addition or
removal of drugs based on market
availability and the other criteria
identified above. As such, the risk
adjustment mapping of RXCUIs to
RXCs, along with the list of NDCs and
HCPCS that crosswalk to each RXCUI,
may be updated throughout a particular
benefit year of risk adjustment. HHS
provides information to issuers on these
updates through the DIY software,
which is published on the CCIIO
website,112 as well as through the EDGE
global reference updates, which are
published on the Distributed Data
Collection program page on the
to recalibrate the models for the applicable benefit
year. This is why, for example, we used the 2019
Q2 mapping document when processing the 2018
enrollee-level EDGE data for recalibration of the
2022 benefit year adult models.
110 See 86 FR at 26164.
111 See, for example, the Creation of the 2018
Benefit Year HHS-Operated Risk Adjustment Adult
Models Draft Prescription Drug (RXCUIs) to HHS
Drug Classes (RXCs) Crosswalk (September 17,
2017), available at https://www.cms.gov/CCIIO/
Resources/Regulations-and-Guidance/Downloads/
Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
112 The August 3, 2021 version of the DIY
software is available at https://www.cms.gov/CCIIO/
Resources/Regulations-and-Guidance.
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Registration for Technical Assistance
Portal (REGTAP).113
This ongoing updating process occurs
on a different timeline than the annual
model recalibration activities for a given
benefit year.
In this rule, we propose to change the
approach for identifying the version of
the RXC mapping document HHS would
use to process a given benefit year’s
enrollee-level EDGE data for the annual
recalibration of the adult risk
adjustment models. More specifically,
we propose to recalibrate the adult risk
adjustment models using the final,
fourth quarter (Q4) RXC mapping
document that was applicable for each
benefit year of data that is included in
the applicable benefit year’s model
recalibration, while continuing to
engage in annual and quarterly review
processes using the inclusion and
exclusion criteria described above. For
example, if we recalibrate the 2024
benefit year adult risk adjustment
models using 2018, 2019, and 2020
benefit years of enrollee-level EDGE
data, we would use the Q4 RXC
mapping document for each of those
benefit years (that is, Q4 2018, Q4 2019,
and Q4 2020, respectively) for
recalibration purposes. We would also
use the criteria described above to
evaluate the inclusion and exclusion of
RXCUIs and may make other updates to
the 2024 benefit year RXC Crosswalk to
ensure drugs are mapped to RXCs,
where appropriate.
We propose to begin to use this
approach for recalibration of the 2023
adult risk adjustment models with the
exception of the 2017 enrollee-level
EDGE data year, for which we propose
to use the most recent RXC mapping
document that was available when we
first processed the 2017 enrollee-level
EDGE data (that is, Q2 2018). We
propose to use the applicable benefit
year’s Q4 RXC mapping documents for
both the 2018 and 2019 benefit years of
enrollee-level EDGE data for the
recalibration of the adult risk
adjustment models for the 2023 benefit
year. Under this proposal, we would
hold those mappings constant when
using the 2018 and 2019 enrollee level
EDGE data years in future benefit year
model recalibrations—meaning that we
would use the applicable benefit year’s
Q4 RXC mapping documents when the
2018 or 2019 benefit year of enrolleelevel EDGE data is used for future
benefit year model recalibrations.114
113 Available at https://www.regtap.info/reg_
library.php?libfilter_topic=3.
114 Consistent with the approach finalized in the
2022 Payment Notice, the 2018 and 2019 enrolleelevel EDGE data would be used for the recalibration
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The purpose of maintaining a specific
version of the same RXC mapping
document for future recalibrations
under this proposal is to limit the
volatility of some coefficients from yearto-year and to ensure that we are
capturing the utilization and costs
observed for the underlying drugs in use
in that year for the condition. Because
the final DIY software update contains
the Q4 list, this approach would also
have the added benefit of providing
issuers the opportunity to see the
mappings/crosswalk that will be
applied to that data year in the final DIY
software release before it is used for
recalibration.
For purposes of the 2023 benefit year
recalibration, we are proposing an
exception for the 2017 benefit year
enrollee-level EDGE data and would
instead use the most recent RXC
mapping document that was available
when we first processed the benefit
year’s enrollee-level EDGE data for
recalibration purposes (that is, Q2
2018). We are proposing this approach
for the 2017 benefit year enrollee-level
EDGE data because we did not include
RXCs in the adult risk adjustment
models until 2018 115 and therefore, we
do not have a Q4 RXC mapping for the
2017 benefit year. Thus, we propose to
use the Q2 2018 RXC mapping
document for the 2017 benefit year
enrollee-level EDGE data year for 2023
model recalibration, consistent with the
mapping used for processing the 2017
data for recalibration of the 2021 and
2022 adult models. We seek comment
on this proposal to change the approach
for identifying the version of the RXC
mapping document that would be used
to process a given benefit year’s data for
the annual recalibration of the adult
models, as well as the proposed
applicability beginning with the 2023
benefit year model recalibration and the
proposed exception for the mapping
document for the 2017 benefit year
enrollee-level EDGE data.
Alternatively, we seek comment on
whether we should take a different
approach to recalibration of the RXC
mappings for the adult risk adjustment
models. Under this alternative, we
would use the latest RXC mapping
document available at the time that we
recalibrate the adult risk adjustment
models and apply it to all three
underlying EDGE data years used to
recalibrate the models for the benefit
year. This alternative is in contrast to
of the 2024 benefit year models and the 2019
enrollee-level EDGE data would be used for the
recalibration of the 2025 benefit year models. See,
supra, note 47.
115 See 81 FR at 94075.
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the current approach of using the most
recent RXC mappings (RXCUIs that map
to RXCs) that are available when we first
process the enrollee-level EDGE data for
recalibration of the applicable benefit
year’s adult models and the above
proposed approach to use the final Q4
RXC mappings that was applicable for
each benefit year of data included in the
applicable benefit year’s model
recalibration. More specifically, under
this alternative approach, we would
instead use the most recent RXCUI to
RXC mapping document available at the
time of developing a benefit year’s
proposed model factors for publication
in the applicable benefit year’s Payment
Notice. As the recalibration process
typically begins several months prior to
the proposed Payment Notice being
released, the most recently available
RXCUI to RXC mapping document
available at the time of developing a
benefit year’s proposed model factors
would generally be either the Q4
mapping from the prior benefit year (for
2023 benefit year (BY) model
recalibration that would have been the
Q4 mapping for BY 2020), or the Q1 or
Q2 mapping document from the year in
which recalibration is occurring (for
2023 benefit year model recalibration
that would have been the Q1 or Q2
mapping for BY 2021). Under this
approach, the RXCUI to RXC mappings
applied to the underlying data years
used in model recalibration would be
updated each year of model
recalibration to reflect the most recently
available decisions in the quarterly
mapping document about which
RXCUIs map to RXCs in the adult
models. While this approach would
represent what is most likely to map to
the RXCs in the upcoming benefit year
of risk adjustment, the RXC mapping
document used would still lag behind
what the RXC mapping document will
be in the applicable benefit year due to
the inherent time lag between when
recalibration occurs for a benefit year
and the actual benefit year.116 Also,
while we believe that the impact will
likely be minimal, this approach to
remapping the RXCs every year may
contribute to volatility of some
coefficients, as the RXC mappings for
the underlying data years would be
updated each year during the annual
model recalibration. Another drawback
of this approach is that the most recent
RXC mappings will be reflective of
similarly recent costs, clinical
relevancies, and prescribing patterns. If
changes to any of these have occurred
116 For example, the current recalibration
activities (in calendar year 2021) relate to the 2023
benefit year risk adjustment models.
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between an earlier data year and the
most recent year, RXC mappings
reflecting the latter will generally be
applied to the former.117 We seek
comment on all aspects of this
alternative approach.
ii. Targeted Changes to RXC Mappings
for Recalibration
Regardless of the version of the RXC
mapping document we use during the
annual adult risk adjustment model
recalibration, there may be a relatively
small number of drugs that still require
additional analysis and consideration
given the changes that can occur in the
market between the data year and the
applicable benefit year of risk
adjustment. The targeted changes to
particular drugs’ mappings would
typically occur when performing
recalibration for future benefit years.
Based on our experience since the
incorporation of RXCs into risk
adjustment models in the 2018 benefit
year, we do not believe that the removal
or addition of an RXCUI from the RXC
mappings (and the associated removal
of the NDCs and HCPCS associated with
that RXCUI) are typically material to
recalibration because most drug
removals are not associated with
utilization and cost levels that would
have a meaningful impact on model
coefficients.118 However, in extenuating
circumstances where HHS believes
there will be a significant impact from
a change in an RXCUI to RXC mapping,
such as: (1) Evidence of significant offlabel prescribing (as was the case with
hydroxychloroquine sulfate 119); (2)
abnormally large changes in clinical
indications or practice patterns
associated with drug usage; or (3)
certain situations in which the cost of a
drug (or biosimilars) become much
higher or lower than the typical cost of
drugs in the same prescription drug
category, HHS will consider whether
changes to the RXCUI to RXC mapping
from the applicable data year crosswalk
are needed for future benefit year
recalibrations. In the following sections
of this proposed rule, we illustrate cases
where we believe extenuating
117 As noted elsewhere in this rule, in certain
circumstances, HHS may consider changes to the
RXCUIs from the applicable data year crosswalk as
part of future benefit year model recalibration and
quarterly review processes.
118 For example, the average effect of the removal
of a single therapeutic drug ingredient in the 2019
Drug Removal Review on 2020 Q1 was an
approximate decrease of 0.14% percent in total
pharmacy claims spending among RXC drugs, and
the average effect of the removal of a single nonhydroxychloroquine therapeutic drug ingredient in
the 2020 Drug Removal Review on 2021 Q1 was an
approximate decrease of 0.68 percent in total
pharmacy claims spending among RXC drugs.
119 See, for example, 86 FR at 24180.
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(a) Descovy®
Descovy® has been included in RXC
01 (Anti-HIV Agents) since RXCs were
initially added to the adult risk
adjustment models for the 2018 benefit
year because it met the inclusion criteria
of being a reliable predictor of the
presence of HIV and being
representative of the costs of other drugs
associated with the treatment of HIV.
However, in October 2019, Descovy®
was approved by the Food and Drug
Administration (FDA) for pre-exposure
prophylaxis (PrEP).121 As noted in the
2022 Payment Notice, HHS removed
Descovy® from the Q4 2020 RXCUI to
RXC mappings for consistency with the
treatment of other PrEP drugs.122 123 The
2023 benefit year model recalibration,
however, is the first benefit year
recalibration that will use the 2019
benefit year enrollee-level EDGE data.
HHS therefore considered removal of
Descovy® from the RXC mappings
applied to the 2019 benefit year
enrollee-level EDGE data year. The
reason for this consideration was that
some enrollees in 2019 would have used
Descovy® for PrEP, which would have
an impact on the recalibration of the
coefficients for RXC 01 (Anti-HIV
Agents) and was in keeping with the
previously mentioned criteria of
changes in clinical indications or
practice patterns associated with drug
usage for further evaluation for potential
exception. However, our internal
analysis of available enrollee-level
EDGE data indicated that most
Descovy® users in 2019 were using the
drug as part of active HIV treatment,
rather than PrEP.124 This, supported by
the fact that Descovy® was approved for
PrEP late in the calendar year of 2019,
suggested that the benefits of keeping
Descovy® mapped to RXC 01 (Anti-HIV
Agents) outweighed the tradeoffs of
removing it.125 Similarly, the 2019
approval and subsequent change in
Descovy® use that triggered its removal
from the crosswalk in Q4 BY 2020 was
not applicable to its use in 2017 or 2018
when it was not approved PrEP.
Therefore, we are not proposing to make
an exception to the RXCUI to RXC
mappings to remove Descovy® from
mapping to RXC 01 in 2017, 2018 and
2019 benefit year enrollee-level EDGE
datasets used for the 2023 benefit year
recalibration of the adult models. We
further note that, regardless of the
mapping approach adopted for
Descovy®, enrollees in risk adjustment
covered plans that use Descovy® (or
other PrEP drugs) in combination with
another HIV treatment drug that maps to
RXC 01 would still receive credit for
RXC 01 in the 2023 benefit year of risk
adjustment. If we adopt the alternative
mapping approach of using the latest
RXC mapping document available at the
time that we recalibrate adult risk
120 As noted above, HHS also conducts quarterly
reviews of RXCUIs that map to RXCs in the adult
models and may make targeted changes to RXC
mappings during a benefit year as a result of these
reviews. We are not proposing any changes to the
quarterly update process or the criteria used for
such reviews.
121 See https://www.fda.gov/news-events/pressannouncements/fda-approves-second-drug-preventhiv-infection-part-ongoing-efforts-end-hiv-epidemic.
122 See 86 FR at 24164. Also see HHS-Developed
Risk Adjustment Model Algorithm ‘‘Do It Yourself
(DIY)’’ Software Instructions for the 2020 Benefit
Year (April 15, 2021 Update), available at https://
www.cms.gov/files/document/cy2020-diyinstructions04132021.pdf.
123 We further explained that enrollees that use
Descovy® (or other PrEP drugs) in combination with
other HIV treatment drugs would still receive credit
for RXC 01. See 86 FR at 24164.
124 Assessing the use of Descovy® for PrEP
involved identifying instances of the use of
Descovy® without an accompanying HIV diagnosis
(as defined by the presence of HCC01) or use of any
other anti-HIV agent (as defined by the use of any
drug in RXC01 other than Descovy®). The reason
the latter helps to identify non-PrEP Descovy® use
is because Descovy® for active HIV–1 treatment is
required to be co-administered with other anti-HIV
agents.
125 Consistent with the approach outlined in this
rule, Descovy® was mapped to RXC 01 in the Q4
2019 RXC mapping applied to enrollee-level EDGE
data that was used to develop the proposed 2023
benefit year factors for the adult models in this rule.
If the alternative approach to RXC mapping is
adopted, such that the Q4 2020 RXC mapping is
applied for the 2023 benefit year recalibration of the
adult models, Descovy® would not map to RXC 01
unless an exception is made.
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circumstances existed and our
evaluation of whether to make targeted
changes to the mapping of select
RXCUIs to RXCs due to those
extenuating circumstances as part of the
annual recalibration process for the
2023 benefit year adult models. In
particular, we consider the cases of
RXCUI to RXC mapping of Descovy®
and hydroxychloroquine sulfate. We
also note that, as discussed above, HHS
may make other exception-based
adjustments during the recalibration
process to reflect changes in clinical
practice and prescribing between
recalibration and the benefit year, such
as the adjustment for Hepatitis C drugs,
where HHS determines it is necessary
and appropriate to do so. We are not
proposing changes to this approach or
the criteria used for these reviews, but
are sharing these examples to further
promote transparency about the process
for targeted changes to mapping of
select RXCUI to RXCs.120
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adjustment models and apply it to all
three underlying EDGE data years used
to recalibrate the models for the benefit
year, Descovy® would not map to RXC
01 and we would have to make an
exception to include it in the mapping.
We seek comment on whether we
should make such an exception to
include and map Descovy® to RXC 01
in the datasets used to recalibrate the
2023 benefit year adult models, should
the alternative approach be finalized.
(b) Hydroxychloroquine Sulfate
Hydroxychloroquine sulfate was
initially mapped to RXC 09 (Immune
Suppressants and Immunomodulators)
in the Q3 BY 2018 review because it
was believed to be a reliable predictor
of the presence of conditions associated
with RXC 09. However, HHS removed
the RXCU for hydroxychloroquine
sulfate from mapping to RXC 09
(Immune Suppressants and
Immunomodulators) in the Q4 BY 2020
RXC mappings because of concerns
regarding unrepresentative expenditures
and off-label prescribing during the
COVID–19 PHE.126 This meant that
beginning with the 2020 benefit year of
risk adjustment, hydroxychloroquine
sulfate no longer mapped to RXC 09.
Then, in part 2 of the 2022 Payment
Notice final rule, we finalized proposals
for the 2022 benefit year model
recalibration, including the targeted
removal of hydroxychloroquine sulfate
for recalibration of the adult models.127
As we explained, our analysis of pre2020 data showed that the cost of
hydroxychloroquine sulfate drugs were
much lower than the costs of other
drugs taken by enrollees assigned RXC
09.128 However, even though
hydroxychloroquine sulfate was no
longer mapping to the RXC 09 in the Q4
2020 DIY software, hydroxychloroquine
sulfate was still mapping to RXC 09 in
the 2018 enrollee-level EDGE data that
would be used for the 2022 benefit year
model recalibration.129 Additionally,
after hydroxychloroquine sulfate was
removed from mapping to RXC 09 in the
126 85 FR at 24180. Also see the HHS-Developed
Risk Adjustment Model Algorithm ‘‘Do It Yourself
(DIY)’’ Software Instructions for the 2020 Benefit
Year, April 15, 2021 Update, available at https://
www.cms.gov/files/document/cy2020-diyinstructions04132021.pdf.
127 86 FR at 24180.
128 86 FR at 24180.
129 The same concern was not present for the
2016 or 2017 enrollee-level EDGE datasets used for
the 2022 benefit year model recalibration because
hydroxychloroquine sulfate was not mapped to
RXC 09 until the Q3 2018 crosswalk.
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Q4 2020 RXC mapping, stakeholders
expressed concern about the impact on
the coefficients for RXC 09, and
associated interaction terms, of
including hydroxychloroquine sulfate in
RXC mapping for recalibration given
that these drugs were such low-cost.
After consideration of these issues, HHS
determined that hydroxychloroquine
sulfate met the criteria of significant offlabel prescribing, changes in clinical
practice patterns associated with drug
usage, and the cost of the drug being
much lower than the typical cost of
drugs in the same prescription drug
category that warrants further
consideration of whether an exception
is appropriate. After determining that
hydroxychloroquine sulfate met those
criteria and considering the feedback
from stakeholders, HHS made the
determination that it should be
removed. Therefore, to effectuate the
targeted removal of hydroxychloroquine
sulfate for the recalibration of the 2022
benefit year adult risk adjustment
models, we only used 2016 and 2017
enrollee-level EDGE data, where
hydroxychloroquine sulfate was not
mapped to RXC 09, for the limited
purpose of developing the coefficients
for RXC 09 (Immune Suppressants and
Immunomodulators) and the related
RXC 09 interactions (RXC 09 × HCC056
or 057 and 048 or 041; RXC 09 ×
HCC056; RXC 09 × HCC057; RXC 09 ×
HCC048, 041).130
Our consideration of the targeted
removal of select drugs from RXC
mappings for purposes of the 2023
benefit year model recalibration
similarly identified hydroxychloroquine
sulfate as a drug for further
consideration. It continues to meet the
criteria of significant off-label
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130 86
FR at 24180.
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prescribing, changes in clinical practice
patterns associated with drug usage, and
the cost of the drug being much lower
than the typical cost of drugs in the
same prescription drug category.
However, unlike the 2022 benefit year
model recalibration, the 2023 benefit
year updates involve two years of
enrollee-level EDGE data (2018 and
2019 data years) where the inclusion of
hydroxychloroquine sulfate could
impact the annual model recalibration
updates to the coefficients and
associated interaction terms for RXC 09.
Therefore, we determined that the
targeted removal of this drug from
mapping to RXC 09 was again
appropriate, but to effectuate the
targeted removal of this drug for
purposes of the 2023 benefit year
recalibration of the adult models, we
would adopt a different approach than
2022 risk adjustment model
recalibration and would remove the
RXCUI to RXC mapping in the 2018 and
2019 enrollee-level EDGE data for
hydroxychloroquine sulfate to RXC 09
(Immune Suppressants and
Immunomodulators) and the related
RXC 09 interactions (RXC 09 x HCC056
or 057 and 048 or 041; RXC 09 x
HCC056; RXC 09 x HCC 057; RXC 09 x
HCC048, 041). We would adopt a
similar approach for any future year that
uses the enrollee-level EDGE data for
the 2018 and 2019 benefit years for
purposes of the annual model
recalibration.131 We note that the same
concern was not present for the 2017
benefit year enrollee-level EDGE data—
131 Consistent with the approach finalized in the
2022 Payment Notice, the 2018 and 2019 benefit
year enrollee-level EDGE datasets would continue
to be used for recalibration of the 2024 benefit year
models; and the 2019 benefit year enrollee-level
EDGE dataset would also be used for recalibration
of the 2025 benefit year models.
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the other benefit year of data that will
be used for the 2023 benefit year model
recalibration—because
hydroxychloroquine was not included
in the RXC crosswalk until the 2018
benefit year.
We seek comment on these proposals.
e. List of Factors To Be Employed in the
Risk Adjustment Models
The proposed 2023 benefit year risk
adjustment model factors resulting from
the equally weighted (averaged) blended
factors from separately solved models
using the 2017, 2018, and 2019 enrolleelevel EDGE data, including all of the
model specification changes and
recalibration proposals detailed above,
are shown in Tables 1 through 6. The
adult, child, and infant models have
been truncated to account for the highcost risk pool payment parameters by
removing 60 percent of costs above the
$1 million threshold.132 Table 1
contains factor coefficients for each
adult model, including the age-sex,
HCCs, RXCs, RXC–HCC interactions,
interacted HCC counts, and enrollment
duration coefficients. Table 2 contains
the factor coefficients for each child
model, including the age-sex, HCCs, and
interacted HCC counts coefficients.
Table 3 lists the proposed HHS–HCCs
that have been selected for the proposed
interacted HCC counts factors that
would apply to the adult and child
models. Table 4 contains the factors for
each infant model. Tables 5 and 6
contain the HCCs included in the infant
models’ maturity and severity
categories, respectively.
BILLING CODE 4120–01–P
132 We are not proposing changes to the high-cost
risk pool parameters for the 2023 benefit year.
Therefore, we would maintain the $1 million
threshold and 60 percent coinsurance rate.
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ale
ale
ale
ale
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ale
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emale
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HCC003
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HCC0ll
HCC012
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HCC018
HCC019
HCC020
HCC021
HCC022
HCC023
HCC026
HCC027
HCC029
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Metastatic Cancer
Lung, Brain, and Other Severe
Cancers, Including Pediatric Acute
L
hoid Leukemia
Non-Hodgkin Lymphomas and Other
Cancers and Tumors
Colorectal, Breast (Age< 50), Kidney,
and Other Cancers
Breast (Age 50+) and Prostate Cancer,
Benign/Uncertain Brain Tumors, and
Other Cancers and Tumors
Thyroid Cancer, Melanoma,
Neurofibromatosis, and Other Cancers
and Tumors
Diabetes without Com lication
Type 1 Diabetes Mellitus, add-on to
Diabetes HCCs 19-21
Protein-Calorie Malnutrition
Li idoses and Gl co enosis
Amyloidosis, Porphyria, and Other
Metabolic Disorders
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23.352
13.933
6.914
6.346
23.257
13.836
6.411
5.847
23.273
13.798
6.388
5.823
23.274
13.797
5.798
5.612
5.525
5.459
5.457
3.679
3.472
3.351
3.255
3.252
2.444
2.287
2.185
2.099
2.096
1.077
0.961
0.838
0.715
0.711
4.972
0.357
0.357
0.357
0.278
4.824
0.294
0.294
0.294
0.247
4.603
0.237
0.237
0.237
0.203
4.209
0.185
0.185
0.185
0.138
4.187
0.184
0.184
0.184
0.136
10.190
27.310
27.310
7.525
9.956
27.073
27.073
7.375
9.733
27.002
27.002
7.287
9.422
26.980
26.980
7.213
9.407
26.979
26.979
7.210
0.509
0.291
0.315
HIV/AIDS
Septicemia, Sepsis, Systemic
Inflammatory Response
S ndrome/Shock
Central Nervous System Infections,
..
Ex
20:01 Jan 04, 2022
0.131
0.137
0.158
0.181
0.205
0.229
0.301
0.344
0.409
0.219
0.236
0.280
0.324
0.374
0.391
0.445
0.447
0.487
Frm 00028
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05JAP2
EP05JA22.006</GPH>
TABLE 1: Proposed Adult Risk Ad"ustment Model Factors for 2023 Benefit Year
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
611
Factor
HCC030
HCC034
HCC035 1
133
HCC035 2
HCC036
HCC037 1
HCC037 2
HCC041
HCC042
HCC045
HCC046
HCC047
HCC048
HCC054
HCC055
HCC056
HCC057
HCC061
HCC062
HCC063
HCC066
HCC067
HCC068
HCC069
HCC070
HCC071
HCC073
HCC074
HCC075
TKELLEY on DSK125TN23PROD with PROP2
HCC081
HCC082
HCC083
VerDate Sep<11>2014
Adrenal, Pituitary, and Other
Si!!Ilificant Endocrine Disorders
Liver Transplant Status/Complications
Acute Liver Failure/Disease,
Including Neonatal Hepatitis
Chronic Liver Failure/End-Stage
Liver Disorders
Cirrhosis of Liver
Chronic Viral Heoatitis C
Chronic Hepatitis, Except Chronic
Viral Hepatitis C
Intestine Transplant
Status/Complications
Peritonitis/Gastrointestinal
Perforation/Necrotizing Enterocolitis
Intestinal Obstruction
Chronic Pancreatitis
Acute Pancreatitis
Inflammatorv Bowel Disease
Necrotizing Fasciitis
Bone/Joint/Muscle
Infections/Necrosis
Rheumatoid Arthritis and Specified
Autoimmune Disorders
Systemic Lupus Erythematosus and
Other Autoimmune Disorders
Osteogenesis Imperfecta and Other
Osteodystroohies
Congenital/Developmental Skeletal
and Connective Tissue Disorders
Cleft Lip/Cleft Palate
Hemophilia
Myelodysplastic Syndromes and
Mvelofibrosis
Aolastic Anemia
Acquired Hemolytic Anemia,
Including Hemolytic Disease of
Newborn
Sickle Cell Anemia <Hb-SS)
Beta Thalassemia Maior
Combined and Other Severe
Immunodeficiencies
Disorders of the Immune Mechanism
Coagulation Defects and Other
Specified Hematological Disorders
Drug Use with Psychotic
Complications
Drug Use Disorder, Moderate/Severe,
or Drug Use with Non-Psychotic
Complications
Alcohol Use with Psychotic
Complications
20:01 Jan 04, 2022
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1.260
1.153
1.052
0.951
0.948
6.981
7.175
6.706
7.010
6.358
6.973
5.888
6.985
5.861
6.985
2.731
2.530
2.426
2.345
2.342
1.231
0.680
0.680
1.124
0.585
0.585
1.026
0.492
0.492
0.919
0.402
0.402
0.915
0.399
0.399
19.349
19.028
18.825
18.506
18.490
10.418
10.050
9.776
9.429
9.413
4.639
2.993
2.748
0.778
9.043
4.470
4.411
2.854
2.521
0.677
8.839
4.264
4.317
2.895
2.388
0.568
8.772
4.204
4.249
3.033
2.305
0.445
8.734
4.194
4.248
3.043
2.304
0.440
8.732
4.194
1.266
1.152
1.046
0.947
0.944
0.823
0.728
0.609
0.479
0.474
2.288
2.119
2.006
1.907
1.903
2.288
2.119
2.006
1.907
1.903
1.555
71.880
12.239
1.416
71.564
12.101
1.311
71.483
12.041
1.217
71.476
11.997
1.215
71.476
11.994
12.239
12.239
12.101
12.101
12.041
12.041
11.997
11.997
11.994
11.994
2.192
2.192
3.744
2.074
2.074
3.636
1.979
1.979
3.600
1.889
1.889
3.611
1.886
1.886
3.613
3.744
1.692
3.636
1.596
3.600
1.516
3.611
1.436
3.613
1.433
1.946
1.774
1.620
1.450
1.444
1.946
1.774
1.620
1.450
1.444
1.151
1.023
0.908
0.796
0.792
Fmt 4701
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05JAP2
EP05JA22.007</GPH>
HCC or
RXCNo
612
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
Factu1
HCC or
HCC084
HCC087 I
HCC087 2
HCC088
HCC090
HCC094
HCC096
HCC097
HCC102
HCC103
HCC106
HCCI07
HCC108
HCC109
HCCll0
HCClll
HCC112
HCC113
HCC114
HCC115
HCC117
HCC118
HCC119
HCC120
HCC121
HCC122
HCCl23
TKELLEY on DSK125TN23PROD with PROP2
HCC125
HCC126
HCC127
HCC128
VerDate Sep<11>2014
Alcohol Use Disorder,
Moderate/Severe, or Alcohol Use with
Specified Non-Psychotic
Comolications
Schizophrenia
Delusional and Other Specified
Psychotic Disorders, Unspecified
Psvchosis
Major Depressive Disorder, Severe,
and Bioolar Disorders
Pcrsonalitv Disorders
Anorexia/Bulimia Nervosa
Prader-Willi, Patau, Edwards, and
Autosomal Deletion Syndromes
Down Syndrome, Fragile X, Other
Chromosomal Anomalies, and
Con!!enital Malformation Svndromes
Autistic Disorder
Pervasive Developmental Disorders,
Exceol Autistic Disorder
Traumatic Complete Lesion Cervical
Spinal Cord
Quadriplegia
Traumatic Complete Lesion Dorsal
Spinal Cord
Paraolegia
Spinal Cord Disorders/lniuries
Amyotrophic Lateral Sclerosis and
Other Anterior Hom Cell Disease
Onadriplegic Cerebral Palsv
Cerebral Palsy, Except Quadriplegic
Spina Bifida and Other
Brain/Spinal/Nervous System
Congenital Anomalies
Myasthenia Gravis/Myoneural
Disorders and Guillain-Barrc
Syndrome/lnflammatory and Toxic
Neuronathv
Muscular Dvslroohv
Multiple Sclerosis
Parkinson's, Huntington's, and
Spinocerebellar Disease, and Other
Neurodegeneralive Disorders
Seizure Disorders and Convulsions
Hydrocephalus
Coma, Brain Compression/Anoxic
Damage
Narcoleosv and Cataplexy
Respirator Dependenceffracheostomy
Status
Respiratorv Arrest
Cardio-Respiratory Failure and Shock,
Including Respiratory Distress
Syndromes
Heart Assistive Device/Artificial
Heart
20:01 Jan 04, 2022
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1.151
1.023
0.908
0.796
0.792
2.331
2.223
2.130
2.035
1.995
1.898
1.886
1.771
1.883
1.768
1.167
1.036
0.904
0.767
0.762
0.771
1.957
7.189
0.658
1.821
6.981
0.524
1.716
6.684
0.382
1.614
6.181
0.377
1.610
6.153
1.071
0.981
0.892
0.785
0.778
0.895
0.771
0.786
0.658
0.667
0.524
0.548
0.382
0.544
0.377
9.152
8.994
8.931
8.905
8.905
9.152
6.565
8.994
6.448
8.931
6.400
8.905
6.356
8.905
6.355
6.565
4.872
5.292
6.448
4.668
5.066
6.400
4.585
4.914
6.356
4.534
4.779
6.355
4.533
4.774
2.348
0.826
1.471
2.184
0.739
1.347
2.084
0.656
1.236
1.996
0.570
1.129
1.992
0.567
1.125
4.849
4.761
4.732
4.703
4.700
1.659
2.305
1.659
1.531
2.156
1.531
1.411
2.045
1.411
1.280
1.937
1.280
1.275
1.933
1.275
1.207
8.794
9.137
1.083
8.572
8.866
0.971
8.329
8.603
0.860
7.970
8.235
0.856
7.954
8.218
5.885
19.391
5.703
19.095
5.583
18.890
5.478
18.665
5.474
18.655
8.094
8.094
7.750
7.750
7.451
7.451
7.070
7.070
7.053
7.053
18.956
18.635
18.352
17.977
17.961
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05JAP2
EP05JA22.008</GPH>
RXCNo
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
ractor
613
Catastropluc
HCC129
HCC130
HCC131
HCC132
HCC135
HCC137
HCC138
HCC139
HCC142
HCC145
HCC146
HCC149
HCC150
HCC151
HCC153
HCC154
HCC156
HCC158
HCC159
HCC160
HCC161 l
HCC161 2
HCC162
HCC163
HCC174
HCC183
HCC184
HCC187
HCC188
HCC203
HCC204
TKELLEY on DSK125TN23PROD with PROP2
HCC205
HCC207
HCC208
VerDate Sep<11>2014
Heart Trans lant Status/Com lications
Heart Failure
Acute M ocardial Infarction
Unstable Angina and Other Acute
Ischemic Heart Disease
Heart Infection/Inflammation, Except
Rheumatic
Hypoplastic Left Heart Syndrome and
Other Severe Congenital Heart
Disorders
Major Congenital Heart/Circulatory
Disorders
Atrial and Ventricular Septa! Defects,
Patent Ductus Artcriosus, and Other
Congenital Heart/Circulatory
Disorders
S ecified Heart Arrh tlnnias
Intracranial Hemorrha e
Ischemic or Uns ecified Stroke
Cerebral Aneurysm and Arteriovenous
Malfonnation
Hemi le ia/Hemi aresis
Monoplegia, Other Paralytic
Syndromes
Atherosclerosis of the Extremities
with Ulceration or Gan rene
Vascular Disease with Com lications
Pulmonary Embolism and Deep Vein
Thrombosis
Lun Trans lant Status/Com lications
C stic Fibrosis
Chronic Obstructive Pulmonary
Disease Includin Bronchiectasis
Severe Asthma
Asthma Exce t Severe
Fibrosis of Lung and Other Lung
Disorders
Aspiration and Specified Bacterial
Pneumonias and Other Severe Lung
infections
Exudative Macular De eneration
Kidney Transplant
Status/Com lications
End Sta e Renal Disease
Chronic Kidne Disease Sta e 5
Chronic Kidney Disease, Severe
Sta e 4
Ecto ic and Molar Pre nanc
Miscarria e with Com lications
Miscarriage with No or Minor
Com lications
Pregnancy with Delivery with Major
Com lications
Pregnancy with Delivery with
Com lications
20:01 Jan 04, 2022
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18.956
1.946
5.518
4.282
18.635
1.836
5.227
4.015
18.352
1.762
5.150
3.907
17.977
1.694
5.147
3.849
17.961
1.693
5.147
3.849
7.915
7.652
7.325
6.837
6.815
1.730
1.625
1.530
1.440
1.438
1.730
1.625
1.530
1.440
1.438
1.730
1.625
1.530
1.440
1.438
1.721
10.077
1.547
2.342
1.591
9.762
1.406
2.190
1.481
9.496
1.307
2.084
1.365
9.152
1.214
1.982
1.368
9.136
1.212
1.979
3.111
2.198
2.980
2.068
2.948
1.979
2.949
1.888
2.949
1.885
7.661
7.504
7.481
7.487
7.487
5.122
6.904
4.991
6.608
4.954
6.237
4.937
5.677
4.938
5.650
11.241
4.913
0.779
10.954
4.768
0.680
10.742
4.705
0.571
10.479
4.655
0.459
10.464
4.654
0.455
0.779
0.779
1.692
0.680
0.680
1.571
0.571
0.571
1.469
0.459
0.459
1.364
0.455
0.455
1.361
6.292
6.048
5.729
5.238
5.213
1.386
6.706
1.237
6.492
1.096
6.310
0.948
5.891
0.944
5.861
21.049
0.988
0.988
20.604
0.901
0.901
20.584
0.842
0.842
20.575
0.783
0.783
20.577
0.780
0.780
2.154
0.908
0.908
1.940
0.798
0.798
1.722
0.641
0.641
1.472
0.433
0.433
1.464
0.424
0.424
3.918
3.614
3.339
3.041
3.036
3.918
3.614
3.339
3.041
3.036
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05JAP2
EP05JA22.009</GPH>
HCC01
RXCNo
614
HCC209
HCC210
HCC211
HCC212
HCC217
HCC218
HCC219
HCC223
HCC226
HCC228
HCC234
HCC251
HCC253
HCC254
Pregnancy with Delivery with No or
Minor Co lications
(Ongoing) Pregnancy without
Delivery with Ma·or Com lications
(Ongoing) Pregnancy without
Dclivc with Com lications
(Ongoing) Pregnancy without
Delivery with No or Minor
Co lications
Chronic Ulcer of Skin, Except
Pressure
Extensive Third -De ree Burns
Ma· or Skin Burn or Condition
Severe Head In'
Hi and Pelvic Fractures
Vertebral Fractures without Spinal
Cordin'u
Traumatic Amputations and
Am utation Com lications
Stem Cell, Including Bone Marrow,
Trans lant Status/Com lications
Artificial Openings for Feeding or
Elimination
Amputation Status, Upper Limb or
Lower Limb
TKELLEY on DSK125TN23PROD with PROP2
Severe illness, 1
Severe illness, 2
Severe illness, 3
Severe illness, 4
Severe illness, 5
Severe illness, 6
Severe illness, 7
Severe illness 8
Severe illness, 9
Severe illness, 10 or more payment
HCCs
Transplant severe illness, 4 payment
HCCs
Transplant severe illness, 5 payment
HCCs
Transplant severe illness, 6 payment
HCCs
Transplanl severe illness, 7 payment
HCCs
Transplant severe illness, 8 or more
HCCs
ntHCC
led for 2 months, at least one
entHCC
led for 3 monUJS, al least one
entHCC
led for 4 months, at least one
entHCC
VerDate Sep<11>2014
20:01 Jan 04, 2022
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Gold
S1h er
Bro1vc
2.796
2.577
2.305
1.925
1.913
1.221
1.081
0.900
0.691
0.683
0.893
0.779
0.623
0.462
0.456
0.334
0.265
0.179
0.113
O.lll
1.471
1.348
1.257
1.172
1.169
21.774
2.417
16.806
7.986
4.055
21.387
2.278
16.566
7.739
3.873
21.092
2.184
16.369
7.691
3.763
20.726
2.106
16.139
7.688
3.662
20.709
2.103
16.129
7.689
3.659
4.788
4.611
4.554
4.529
4.528
20.991
20.797
20.488
20.005
19.981
5.803
5.684
5.657
5.654
5.654
1.685
1.522
1.403
1.302
1.299
-4.958
-3.796
-2.837
-2.036
-1.576
-0.606
-0.399
1.675
10.392
-4.824
-3.665
-2.627
-1.708
-1.091
0.108
0.377
2.727
12.008
-4.594
-3.329
-2.160
-1.094
-0.319
1.082
1.415
3.986
13.694
-4.209
-2.788
-1.445
-0.196
0.768
2.407
2.829
5.656
15.874
-4.187
-2.763
-1.413
-0.157
0.814
2.463
2.889
5.726
15.966
3.563
3.539
3.534
3.560
3.567
6.997
6.977
6.968
7.011
7.018
13.244
B.242
B.276
1:U85
13.396
18.237
18.225
18.266
18.387
18.397
33.690
33.890
34.117
34.474
34.495
3.425
2.687
2.120
1.647
1.631
1.925
1.475
1.118
0.838
0.829
l.039
0.747
0.506
0.327
0.321
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EP05JA22.010</GPH>
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
615
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
Faclor
HCC or
RXCNo
Enrolled for 5 months, at least one
a mentHCC
ed for 6 months, at least one
RXC08
RXC09 135
TKELLEY on DSK125TN23PROD with PROP2
RXClO
RXC0lx
HCC00l
RXC02x
HCC037 1
, 036,
035_2,
035 1 034
RXC03xH
CC142
RXC04xH
CC184,
183, 187,
188
RXC05xH
CC048,
041
RXC06xH
CC018,
019, 020,
021
RXC07xH
CC018,
019, 020,
021
RXC08xH
CC118
VerDate Sep<11>2014
Inflammato Bowel Disease A ents
Insulin
Anti-Diabetic Agents, Except Insulin
and Metformin Onl
Multi le Sclerosis A ents
Immune Suppressants and
Immunomodulators
stic Fibrosis A ents
Additional effect for enrollees with
RXC0l andHCC00l
Additional effect for enrollees with
RXC 02 and (HCC 037_ 1 or 036 or
035 2 or 035 1 or 034
Additional effect for enrollees with
RXC 03 and HCC 142
0.103
1.491
1.553
1.196
0.725
0.094
1.608
1.314
0.976
0.618
0.086
1.568
1.127
0.736
0.502
0.063
1.643
0.879
0.496
0.384
0.039
1.631
0.870
0.487
0.380
22.757
16.519
21.749
15.829
21.373
15.703
21.176
15.737
21.176
15.740
16.556
2.676
16.178
2.811
16.118
3.123
16.167
3.539
16.171
3.550
-0.680
-0.585
-0.492
-0.402
-0.399
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
-0.644
-0.458
-0.379
-0.300
-0.297
0.647
0.718
0.814
0.878
0.881
-0.180
-0.128
-0.096
-0.106
-0.106
0.015
0.510
0.888
1.249
1.257
Additional effect for enrollees with
RXC 04 and (HCC 184 or 183 or 187
or 188
Additional effect for enrollees with
RXC05 and CC048 or041
Additional effect for enrollees with
RXC 06 and (HCC 018 or019 or020
or021
Additional effect for enrollees with
RXC 07 and (HCC 018 or019 or020
or021
Additional effect for enrollees with
RXC 08 and HCC 118
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05JAP2
EP05JA22.011</GPH>
RXC03 134
RXC04
RXC05
RXC06
RXC07
Anti-HIV A ents
Anti-Hepatitis C (HCV) Agents,
Direct Actin A ents
Antiarrh
616
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
F:1cto1
H(C 01
RXC Nu
RXC09xH
CC056 or
057and048
or041
RXC09xH
CC056
RXC09xH
CC057
RXC09xH
CC048,
041
RXClOxH
CC159,
158
Additional effect for enrollees with
RXC 09 and (HCC 048 or 041) and
<HCC 056 or 057)
Additional effect for enrollees with
RXC 09 and HCC 056
Additional effect for enrollees with
RXC 09 and HCC 057
Pl:1t11n1111
Gold
S11\c1
BIOII/C
C1t:1,twpli1c
0.884
0.776
0.832
0.877
0.878
-1.266
-1.152
-1.046
-0.947
-0.944
-0.823
-0.728
-0.609
-0.479
-0.474
0.431
0.774
0.884
1.018
1.023
49.790
49.773
49.829
49.924
49.926
Additional effect for enrollees with
RXC 09 and rHCC 048 or041)
Additional effect for enrollees with
RXC 10 and <HCC 159 or 158)
TABLE 2: Proposed Child Risk Adjustment Model Factors for 2023 Benefit Year
HN/AIDS
Septicemia., Sepsis, Systemic Inflammatory
Res onse S ndrome/Shock
Central Nervous System Infections, Except
Viral Menin itis
Viral or Uns ecilied Menin itis
ortunistic Infections
Metastatic Cancer
Lung, Brain, and Other Severe Cancers,
Including Pediatric Acute Lymphoid
Leukemia
Non-Hodgkin Lymphomas and Other Cancers
and Tumors
Colorectal, Breast (Age< 50), Kidney, and
Other Cancers
Breast (Age 50+) and Prostate Cancer,
Benign/Uncertain Brain Tumors, and Other
Cancers and Tumors
Thyroid Cancer, Melanoma,
Neurofibromatosis, and Other Cancers and
TKELLEY on DSK125TN23PROD with PROP2
Diabetes with
Diabetes with Chm
ations
lications
Protein-Calorie Malnutrition
Muco ol saccharidosis
VerDate Sep<11>2014
20:01 Jan 04, 2022
Jkt 253001
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6.429
14.096
5.960
13.866
5.765
13.726
5.649
13.622
5.647
13.621
13.094
12.934
12.866
12.837
12.837
11.331
15.156
31.899
8.432
11.241
15.121
31.609
8.188
11.109
15.054
31.506
8.073
10.995
14.969
31.464
7.991
10.994
14.965
31.463
7.988
6.783
6.561
6.434
6.329
6.326
3.961
3.790
3.658
3.530
3.525
3.961
3.790
3.658
3.530
3.525
1.014
0.878
0.759
0.617
0.613
14.250
2.502
2.502
2.502
17.721
38.371
14.144
2.226
2.226
2.226
17.613
38.095
14.055
1.938
1.938
1.938
17.580
38.005
13.989
1.636
1.636
1.636
17.574
37.967
13.985
1.628
1.628
1.628
17.573
37.966
Fmt 4701
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E:\FR\FM\05JAP2.SGM
05JAP2
EP05JA22.012</GPH>
F,1cto1
Lipidoses and Glvco_genosis
Congenital Metabolic Disorders, Not
Elsewhere Classified
Amyloidosis, Porphyria, and Other Metabolic
Disorders
Adrenal, Pituitary, and Other Significant
Endocrine Disorders
Liver Transnlant Status/Comnlications
Acute Liver Failure/Disease, Including
Neonatal Hepatitis
Chronic Liver Failure/End-Stage Liver
Disorders
Cirrhosis of Liver
Chronic Viral Hepatitis C
Chronic Hepatitis, Except Chronic Viral
Heoatitis C
Intestine Transolant Status/Comolications
Peritonitis/Gastrointestinal
Perforation/Necrotizing Enterocolitis
Intestinal Obstruction
Chronic Pancreatitis
Acute Pancreatitis
Inflammatory Bowel Disease
Necrotizing Fasciitis
Bone/Joint/Muscle Infections/Necrosis
Rheumatoid Art.hritis and Specified
Autoimmune Disorders
Systemic Lupus Erythematosus and Other
Autoimmune Disorders
Osteogenesis Imperfecta and Other
Osteodvstroohies
Congenital/Developmental Skeletal and
Connective Tissue Disorders
Cleft Lio/Cleft Palate
Hemophilia
Myelodysplastic Syndromes and
Mvclofibrosis
Aplastic Anemia
Acquired Hemolytic Anemia, Including
Hemolvtic Disease of Newborn
Sickle Cell Anemia <Hb-SS)
Beta Thalassemia Maior
Combined and Other Severe
Immunodeficiencies
Disorders of the Immune Mechanism
Coll!,'lllation Defects and Other Specified
Hematological Disorders
Drug Use with Psychotic Complications
Drug Use Disorder, Moderate/Severe, or Drug
Use with Non-Psvchotic Complications
Alcohol Use with Psychotic Comnlications
Alcohol Use Disorder, Moderate/Severe, or
Alcohol Use with Specified Non-Psychotic
Comnlications
Schizophrenia
Delusional and Other Specified Psychotic
Disorders, Unspecified Psvchosis
VerDate Sep<11>2014
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Pl;1\11llllll
Cold
S1hc1
Rt0ll/C
( a Lisi 10ph1c
38.371
5.598
38.095
5.463
38.005
5.374
37.967
5.298
37.966
5.295
5.598
5.463
5.374
5.298
5.295
6.772
6.502
6.396
6.346
6.345
14.250
10.018
14.144
9.833
14.055
9.778
13.989
9.776
13.985
9.775
9.546
9.360
9.278
9.240
9.239
2.657
1.774
0.693
2.549
1.629
0.589
2.455
1.541
0.484
2.373
1.506
0.385
2.374
1.506
0.383
13.918
17.163
13.773
16.863
13.667
16.788
13.578
16.799
13.576
16.801
3.430
11.310
4.408
10.270
3.164
3.164
5.297
3.214
11.100
4.138
9.855
2.937
2.937
5.022
3.061
11.034
3.969
9.687
2.798
2.798
4.885
2.912
11.016
3.820
9.584
2.693
2.693
4.795
2.907
11.017
3.816
9.581
2.690
2.690
4.793
1.300
1.170
1.038
0.911
0.906
1.188
1.076
0.989
0.952
0.950
1.188
1.076
0.989
0.952
0.950
1.348
72.572
12.112
1.157
72.060
11.943
0.959
71.904
11.864
0.771
71.853
11.812
0.765
71.853
11.811
12.112
12.112
11.943
11.943
11.864
11.864
11.812
11.812
11.811
11.811
4.650
4.650
4.084
4.438
4.438
3.920
4.306
4.306
3.820
4.201
4.201
3.728
4.197
4.197
3.724
4.084
3.254
3.920
3.117
3.820
3.002
3.728
2.895
3.724
2.892
2.069
2.069
1.882
1.882
1.730
1.730
1.578
1.578
1.573
1.573
1.256
1.256
l.112
l.112
0.971
0.971
0.815
0.815
0.810
0.810
4.160
3.217
3.861
2.957
3.673
2.762
3.518
2.574
3.514
2.569
Fmt 4701
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E:\FR\FM\05JAP2.SGM
05JAP2
617
EP05JA22.013</GPH>
TKELLEY on DSK125TN23PROD with PROP2
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
Major Depressive Disorder, Severe, and
Bipolar Disorders
Personalitv Disorders
Anorexia/Bulimia Nervosa
Prader-Willi, Patau, Edwards, and Autosomal
Deletion Syndromes
Down Syndrome, Fragile X, Other
Chromosomal Anomalies, and Congenital
Malformation Svndromes
Autistic Disorder
Pervasive Developmental Disorders, Except
Autistic Disorder
Traumatic Complete Lesion Cervical Spinal
Cord
Ouadriolegia
Traumatic Complete Lesion Dorsal Spinal
Cord
Paraolegia
Spinal Cord Disorders/Injuries
Amyotrophic Lateral Sclerosis and Other
Anterior Hom Cell Disease
Ouadriplcgic Cerebral Palsy
Cerebral Palsv Exceot Ouadriolegic
Spina Bifida and Other Brain/Spinal/Nervous
Svstem Congenital Anomalies
Myasthenia Gravis/Myoneural Disorders and
Guillain-Barre Syndrome/Inflammatory and
Toxic Neuronathv
Muscular Dvstrophv
Multiole Sclerosis
Parkinson's, Huntington's, and Spinocerebellar
Disease, and Other Neurodegenerative
Disorders
Seizure Disorders and Convulsions
Hydrocephalus
Coma, Brain Comoression/Anoxic Damage
Narcolepsy and Cataplexv
Resoirator Deoendence/Tracheostomv Status
Resoiratorv Arrest
Cardio-Respiratory Failure and Shock,
Including Resoiratorv Distress Svndromes
Heart Assistive Device/Artificial Heart
Heart Transolant Status/Comolications
Heart Failure
Acute Mvocardial Infarction
Unstable An!,>ina and Other Acute Ischemic
Heart Disease
Heart Infection/Inflammation, Except
Rheumatic
Hypoplastic Left Heart Syndrome and Other
Severe Congenital Heart Disorders
Major Congenital Heart/Circulatory Disorders
Atrial and Ventricular Septa] Defects, Patent
Ductus Arteriosus, and Other Congenital
Heart/Circulatorv Disorders
Specified Heart Arrhythmias
Intracranial Hemorrhage
VerDate Sep<11>2014
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Pl;1\11llllll
Cold
S1hc1
Rt0ll/C
( a Lisi 10ph1c
2.404
2.188
1.999
1.813
1.807
0.506
2.260
11.538
0.411
2.088
11.458
0.304
1.960
11.385
0.219
1.844
11.331
0.218
1.840
11.329
1.541
1.388
1.245
1.096
1.089
2.404
0.506
2.188
0.411
1.999
0.304
1.813
0.219
1.807
0.218
9.534
9.288
9.170
9.099
9.098
9.534
9.288
8.747
9.170
8.655
9.099
8.602
9.098
8.601
3.486
48.007
8.747
3.281
47.749
8.655
3.131
47.629
8.602
2.982
47.534
8.601
2.975
47.531
3.118
1.411
1.616
2.961
1.269
1.469
2.881
1.123
1.357
2.822
0.968
1.248
2.821
0.962
1.244
9.977
9.787
9.721
9.697
9.697
5.687
12.134
5.687
5.505
11.693
5.505
5.380
11.573
5.380
5.258
11.551
5.258
5.254
11.552
5.254
1.551
11.308
11.213
5.298
27.709
14.691
14.691
1.413
11.280
11.150
5.103
27.451
14.404
14.404
1.266
11.259
11.071
4.953
27.357
14.285
14.285
1.129
11.254
11.028
4.799
27.326
14.230
14.230
1.124
11.254
11.026
4.793
27.325
14.230
14.230
13.918
13.918
4.805
1.458
1.458
13.773
13.773
4.702
1.316
1.316
13.667
13.667
4.634
1.201
1.201
13.578
13.578
4.582
1.094
1.094
13.576
13.576
4.580
1.091
1.091
15.257
15.116
15.014
14.897
14.892
2.816
2.592
2.403
2.194
2.181
0.974
0.698
0.842
0.593
0.703
0.496
0.571
0.430
0.568
0.428
2.605
12.911
2.419
12.812
2.291
12.746
2.169
12.660
2.165
12.654
8.988
8.988
Fmt 4701
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05JAP2
EP05JA22.014</GPH>
TKELLEY on DSK125TN23PROD with PROP2
618
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
619
I ,lClOI
-
Severe illness, 1 payment HCC
Severe illness, 2 payment HCCs
Severe illness, 3 payment HCCs
Severe illness, 4 payment HCCs
Severe illness, 5 payment HCCs
VerDate Sep<11>2014
20:01 Jan 04, 2022
Jkt 253001
PO 00000
1.877
2.557
1.766
2.380
1.705
2.267
1.648
2.129
1.647
2.119
4.097
2.562
12.054
3.963
2.401
3.877
2.266
11.700
3.782
2.127
11.637
3.777
2.122
11.635
7.002
19.955
6.852
19.813
6.796
19.737
6.764
19.693
6.763
19.692
13.918
54.075
1.973
13.773
53.528
1.798
13.667
53.389
1.651
13.578
53.377
1.502
13.576
53.377
1.497
1.310
0.371
1.310
1.149
0.288
1.149
10.858
10.819
0.982
0.198
0.982
10.800
0.800
0.124
0.800
10.793
0.794
0.121
0.794
10.793
14.250
35.540
3.500
3.500
2.005
0.867
0.867
3.599
14.144
35.287
3.273
3.273
0.737
0.737
3.289
14.055
35.230
3.093
3.093
1.554
0.556
0.556
2.974
13.989
35.234
2.995
2.995
1.287
0.329
0.329
2.581
13.985
35.234
2.987
2.987
1.276
0.319
0.319
2.568
3.599
2.570
3.289
2.339
2.974
2.035
2.581
1.585
2.568
1.567
0.942
0.797
0.594
0.378
0.371
0.942
0.797
0.594
0.378
0.371
0.447
0.344
0.227
0.135
0.134
1.312
19.825
1.901
19.825
3.488
3.451
1.190
19.594
1.739
19.594
3.241
3.235
1.080
19.501
1.609
19.501
3.079
3.067
0.988
0.986
19.461
1.488
19.461
2.959
3.540
3.302
3.128
2.950
2.943
13.918
13.773
13.667
13.578
13.576
6.793
3.540
6.599
3.302
6.560
3.128
6.565
2.950
6.566
2.943
-
-9.888
-9.814
-8.266
-7.829
-5.539
Frm 00037
Fmt 4701
11.811
1.788
I'll
-9.970
-9.827
-8.306
-7.855
-5.425
Sfmt 4725
19.461
1.491
19.461
2.963
2.894
2.888
1111 I-10.162 ii
-10.158
-10.057
-9.906
-8.198
-7.707
-5.125
E:\FR\FM\05JAP2.SGM
-10.003
-8.090
-7.515
-4.779
05JAP2
-10.006
-8.086
-7.506
-4.766
EP05JA22.015</GPH>
TKELLEY on DSK125TN23PROD with PROP2
Ischemic or Unspecified Stroke
Cerebral Aneurysm and Arteriovenous
Malformation
HemiplewHemiparesis
Monoolegia, Other Paralvtic Svndromes
Atherosclerosis of the Extremities with
Ulceration or Gan1->rene
Vascular Disease with Complications
Pulmonary Embolism and Deep Vein
Thrombosis
Lung Transplant Status/Complications
Cystic Fibrosis
Chronic Obstructive Pulmonary Disease,
Including Bronchiectasis
Severe AsUnna
Asthma, Exceot Severe
Fibrosis ofLnn!! and Other Lnn!! Disorders
Aspiration and Specified Bacterial
Pneumonias and Other Severe Lung Infections
Kidnev Transplant Status/Complications
End Stage Renal Disease
Chronic Kidney Disease Stage 5
Chronic Kidnev Disease Severe (Stage 4)
Ectopic and Molar Pregnancv
Miscarria!!e with Comnlications
Miscarriage with No or Minor Complications
Pregnancy with Delivery with Major
Complications
Pregnancv with Delivery with Complications
Pregnancy with Delivery with No or Minor
Comolications
(Ongoing) Pregnancy without Delivery with
Major Complications
(Ongoing) Pregnancy without Delivery with
Complications
(Ongoing) Pregnancy without Delivery with
No or Minor Complications
Chronic Ulcer of Skin. Exceot Pressure
Extensive Third -Deirree Burns
Major Skin Burn or Condition
Severe Head Iniurv
Hip and Pelvic Fractures
Vertebral Fractures without Spinal Com
Iniurv
Traumatic Amputations and Amputation
Complications
Stem Cell, Including Bone Marrow,
Transplant Status/Complications
Artificial Openings for Feeding or Elimination
Amputation Status, Upper Limb or Lower
Limb
620
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
F:ictor
Platmllm
(,old
S1hcr
Rro1uc
Cat:ist roph1c
Severe illness, 6 or 7 payment HCCs
Severe illness, 8 or more payment HCCs
Transplant severe illness, 4 or more payment
HCCs
-0.942
15.918
16.762
-0.645
16.769
16.867
-0.200
17.562
16.917
0.273
18.301
16.950
0.290
18.326
16.952
TABLE 3: HCCs Selected for the Proposed HCC Interacted Counts Variables for the
I Be2mnml! wit
' h the 2023 B ene f'1t Y ear
Ad utan
I
d Ch I'Id M odes
Payment HCC
HCC 2 Septicemia, Sepsis, Systemic Inflammatory
Response Svndrome/Shock
HCC 3 Central Nervous System Infections, Except Viral
Menine:itis
HCC 4 Viral or Unspecified Meningitis
HCC 6 Opportunistic Infections
HCC 18 Pancreas Transplant
HCC 23 Protein-Calorie Malnutrition
HCC 34 Liver Transplant Status/Complications
HCC 41 Intestine Transplant Status/Complications
HCC 42 Peritonitis/Gastrointestinal Perforation/Necrotizing
Enterocolitis
HCC 96 Prader-Willi, Patau, Edwards, and Autosomal
Deletion Syndromes
HCC 121 Hvdroceohalus
HCC 122 Coma Brain Compression/Anoxic Damage
HCC 125 Resoirator Deoendence/Tracheostomv Status
HCC 135 Heart Infection/Inflammation Except Rheumatic
HCC 145 Intracranial Hemorrhage
HCC 156 Pulmonarv Embolism and Deep Vein Thrombosis
HCC 158 Lung Transplant Status/Comolications
HCC 163 Aspiration and Specified Bacterial Pneumonias
and Other Severe Lung Infections
HCC 183 Kidnev Transplant Status/Complications
HCC 218 Extensive Third -Degree Bums
HCC 223 Severe Head Iniurv
HCC 251 Stem Cell, Including Bone Marrow, Transplant
Status/Complications
G 13 (Includes HCC 126 Respiratory Arrest and HCC 127
Cardio-Respiratory Failure and Shock, Including Respiratory
Distress Syndromes)
G 14 (Includes HCC 128 Hearl Assistive Device/Artificial
Heart and HCC 129 Heart Transplant Status/Complications)
Severity Illness Indicator
Transplant Indicator
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Extremely I111111ature * Severity Level 5
Hi hest
Extremel Illllllature * Severi · Level 4
Extremel Illllllature * Severi · Level 3
Extremel Illllllature * Severi · Level 2
Extremely Illllllature * Severity Level 1
Lowest
Inunature * Severi Level 5 Hi hest
Inunature * Severi Leve14
Inunature * Severi Level 3
Inunature * Severi Leve12
VerDate Sep<11>2014
20:01 Jan 04, 2022
Jkt 253001
PO 00000
Frm 00038
211.839
210.253
209.766
209.650
209.649
148.689
33.465
33.465
33.465
146.914
32.024
32.024
32.024
146.263
31.445
31.445
31.445
145.989
31.172
31.172
31.172
145.984
31.166
31.166
31.166
114.339
68.723
33.465
30.547
112.648
67.058
32.024
29.122
112.101
66.498
31.445
28.535
111.930
66.297
31.172
28.241
111.927
66.293
31.166
28.233
Fmt 4701
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E:\FR\FM\05JAP2.SGM
05JAP2
EP05JA22.016</GPH>
TKELLEY on DSK125TN23PROD with PROP2
TABLE 4: Pro osed Infant Risk Ad· ustment Model Factors for 2023 Benefit Year
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
Platinum
Group
lnunature * Severity Level 1 Lowest)
Premature/Multiples * Severity Level 5
Hi hest
I Silver
Gold
621
I Rron:rc I Catastrophic
23.224
II
Premature/Multi les * Severity Level 2
Premature/Multiples * Severity Level 1
Lowest
Tenn * Severity Level 5 Hi hest
Tenn * Severi Level 4
Tenn * Severi · Level 3
Tenn * Severi • Level 2
Tenn * Severi · Level 1 Lowest
A el * Severil ' Level 5 Hi hesl
A e 1 * Severi · Level 4
A el * Severity Level 3
A el* Severi Level 2
A el* Severi ·Levell Lowest
A e0Male
AelMale
I I
I I I
• I
:
I.
28.534
13.748
7.676
5.767
27.101
12.735
6.953
5.141
26.508
12.108
6.336
4.569
26.227
11.610
5.695
4.022
26.221
11.594
5.672
4.004
78.537
15.369
5.921
3.667
1.898
63.541
12.611
2.978
1.969
0.573
0.534
0.112
77.271
14.386
5.324
3.171
1.532
62.812
12.090
2.695
1.732
0.489
0.491
0.096
76.765
13.769
4.752
2.610
1.094
62.524
11.787
2.472
1.508
0.433
0.451
0.077
76.525
13.290
4.173
2.020
0.778
62.386
11.574
2.291
1.303
0.392
0.386
0.058
76.520
13.278
4.153
1.999
0.769
62.383
11.567
2.285
1.296
0.391
0.384
0.058
Extremel Immature
Immature
Immature
Tenn or Post-Tenn Sin leto
All a e 1 infants
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 5
Severitv Level 4
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Myelodysplastic Svndromes and Myelofibrosis
Aplastic Anemia
Combined and Other Severe Immunodeficiencies
Traumatic Complete Lesion Cervical Spinal Cord
Quadriplegia
Amvotrophic Lateral Sclerosis and Other Anterior Hom Cell Disease
Quadriplegic Cerebral Palsy
Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflaimnatory
and Toxic Ncuropathy
Coma, Brain Comnression/Anoxic Dainage
Resoiratorv Arrest
Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes
Acute Mvocardial Infarction
Heart lnfection/lnflaimnation, Except Rheumatic
Major Congenital Heart/Circulatory Disorders
Intracranial Hemorrhage
lschemic or Unsoecified Stroke
Vascular Disease with Complications
Pulmonarv Embolism and Deep Vein Thrombosis
Asoiration and Soecified Bacterial Pneumonias and Other Severe Lnmr Infections
Chronic Kidney Disease Stage 5
Artificial Ooenings for Feedin!!: or Elimination
HIV/AIDS
Central Nervous Svstem Infections Except Viral Meningitis
Oooortunistic Infections
Non-Hod!!:kin Lvmohomas and Other Cancers and Tumors
Colorectal Breast (Age< 50), Kidney and Other Cancers
Breast (Age 50+) and Prostate Cancer, Benign/Uncertain Brain Tumors, and Other
Cancers and Tumors
Lipidoscs and Glvcogcnosis
Intestinal Obstruction
Necrotizin!!: Fasciitis
Bone/Joint/Muscle Infections/Necrosis
Osteogenesis Imoerfecta and Other Osteodvstrophies
Cleft Lip/Cleft Palate
Hemophilia
Disorders of the Immune Mechanism
Coa!!:Ulation Defects and Other Specified Hematological Disorders
Drug Use with Psvchotic Complications
Drug Use Disorder, Moderate/Severe, or Drug Use with Non-Psychotic Complications
Alcohol Use with Psychotic Complications
Alcohol Use Disorder, Moderate/Severe, or Alcohol Use with Specified Non-Psychotic
Comnlicalions
Prader-Willi Patau. Edwards and Autosomal Deletion Syndromes
Traumatic Complete Lesion Dorsal Spinal Cord
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Muscular Dvstrophv
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Unstable Am1ina and Other Acute lschemic Heart Disease
Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital
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f. Cost-Sharing Reduction Adjustments
We propose to continue including an
adjustment for the receipt of CSRs in the
risk adjustment models in all 50 states
and the District of Columbia. While we
continue to study and explore ways to
update the CSR adjustments to improve
136 See Appendix A of the 2021 HHS-Operated
Risk Adjustment Technical Paper on Possible
Model Changes, available at https://www.cms.gov/
files/document/2021-ra-technical-paper.pdf.
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prediction for CSR enrollees,136 for the
2023 benefit year, to maintain stability
and certainty for issuers, we are
proposing to maintain the CSR
adjustment factors finalized in the 2019,
2020, 2021, and 2022 Payment
Notices.137 See Table 7. We also propose
to continue to use a CSR adjustment
137 See 83 FR 16930 at 16953; 84 FR 17454 at
17478 through 17479; 85 FR 29164 at 29190; and
86 FR 24140 at 24181.
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factor of 1.12 for all Massachusetts
wrap-around plans in the risk
adjustment plan liability risk score
calculation, as all of Massachusetts’
cost-sharing plan variations have AVs
above 94 percent.138 We seek comment
on these proposals.
138 See
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TABLE 7: Cost-Sharin Reduction Ad"ustment Factors
100-150% of Federal
L
1.12
Plan Variation 94%
Plan Variation 87%
Plan Variation 73%
Standard Plan 70%
200-250% of FPL
>250%ofFPL
1.12
1.00
1.00
>300%ofFPL
>300%ofFPL
>300%ofFPL
g. Model Performance Statistics
Each benefit year, to evaluate risk
adjustment model performance, we
examine each model’s R-squared
statistic and PRs. The R-squared
statistic, which calculates the
percentage of individual variation
explained by a model, measures the
predictive accuracy of the model
overall. The PR for each of the HHS risk
adjustment models is the ratio of the
weighted mean predicted plan liability
for the model sample population to the
weighted mean actual plan liability for
the model sample population. The PR
represents how well the model does on
average at predicting plan liability for
that subpopulation.
A subpopulation that is predicted
perfectly would have a PR of 1.0. For
each of the current and proposed HHS
risk adjustment models, the R-squared
statistic and the PRs are in the range of
published estimates for concurrent risk
adjustment models.139 As detailed in
the 2021 RA Technical Paper, the
proposed model specification updates,
when taken together, generally
demonstrate improvements in R-squared
as well as PRs.140 Because we propose
to blend the coefficients from separately
solved models based on the 2017, 2018,
and 2019 benefit years’ enrollee-level
EDGE data, we are publishing the Rsquared statistic for each model
separately to verify their statistical
validity. The R-squared statistics for the
proposed 2023 benefit models are
shown in Table 8.
..
TABLES RS
- iQuared StafISfIC fior Proposed HHS Ri skAd"1ust ment M 0 dels
139 Hileman, Geof and Spenser Steele. ‘‘Accuracy
of Claims-Based Risk Scoring Models.’’ Society of
Actuaries. October 2016.
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2018 Enrolleelevel EDGE Data
0.4467
0.4400
0.4366
0.4337
0.4336
0.3527
0.3494
0.3470
0.3444
0.3443
0.3112
0.3073
0.3053
0.3037
0.3037
140 See, for example, Chapter 5.1 in the 2021
HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes, available at https://
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2019 Enrolleelevel EDGE Data
0.4475
0.4407
0.4371
0.4340
0.4339
0.3535
0.3501
0.3476
0.3451
0.3450
0.3146
0.3107
0.3087
0.3073
0.3072
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Platinum Adult
Gold Adult
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Bronze Adult
Catastrophic Adult
Platinum Child
Gold Child
Silver Child
Bronze Child
Catastroohic Child
Platinum Infant
Gold Infant
Silver Infant
Bronze Infant
Catastrophic Infant
2017 Enrollee
level EDGE Data
0.4501
0.4438
0.4405
0.4376
0.4374
0.3487
0.3453
0.3430
0.3405
0.3404
0.3311
0.3272
0.3252
0.3237
0.3236
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BILLING CODE 4120–01–C
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3. Overview of the HHS Risk
Adjustment Methodology (§ 153.320)
In part 2 of the 2022 Payment Notice
final rule, we finalized the proposal to
continue to use the state payment
transfer formula finalized in the 2021
Payment Notice for the 2022 benefit
year and beyond, unless changed
through notice-and-comment
rulemaking.141 We explained that under
this approach, we will no longer
republish these formulas in future
annual HHS notice of benefit and
payment parameter rules unless changes
are being proposed. We are not
proposing any changes to the formula in
this rule and therefore are not
republishing the formulas in this rule.
We would continue to apply the
formula as finalized in the 2021
Payment Notice in the states where HHS
operates the risk adjustment program in
the 2023 benefit year.142 Additionally,
as finalized in the 2020 Payment Notice,
we will maintain the high-cost risk pool
parameters for the 2020 benefit year and
beyond, unless amended through
notice-and-comment rulemaking.143 We
are not proposing any changes to the
high-cost risk pool parameters for the
2023 benefit year; therefore, we would
maintain the $1 million threshold and
60 percent coinsurance rate.
4. Risk Adjustment State Flexibility
Requests (§ 153.320(d))
We propose to repeal the ability of
states to request a reduction in risk
adjustment state transfers starting with
the 2024 benefit year, with an exception
for states that have requested such
reductions in prior benefit years. We
also solicit comments on requests from
Alabama to reduce risk adjustment state
transfers for the 2023 benefit year in the
individual (including the catastrophic
and non-catastrophic risk pools) and
small group markets. In the 2019
Payment Notice, we provided states the
flexibility to request a reduction to the
applicable risk adjustment state
transfers calculated by HHS using the
state payment transfer formula for the
state’s individual (catastrophic or noncatastrophic risk pools), small group, or
merged markets by up to 50 percent to
more precisely account for differences
in actuarial risk in the applicable state’s
markets.144 We finalized that any
requests we received would be
published in the applicable benefit
141 See
86 FR at 24183–24186.
an illustration and further details on the
state payment transfer formula, see 86 FR at 24183–
24186.
143 See 84 FR at 17466–17468.
144 83 FR 16955–16960.
142 For
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year’s proposed HHS notice of benefit
and payment parameters, and the
supporting evidence provided by the
state in support of its request would be
made available for public comment.145
In accordance with § 153.320(d)(2),
beginning with the 2020 benefit year,
states must submit such requests with
the supporting evidence and analysis
outlined under § 153.320(d)(1) by
August 1st of the calendar year that is
2 calendar years prior to the beginning
of the applicable benefit year. If
approved by HHS, state reduction
requests will be applied to the plan
PMPM payment or charge state payment
transfer amount (Ti in the state payment
transfer formula).146 For the 2020 and
2021 benefit years, the state of Alabama
submitted a 50 percent risk adjustment
transfer reduction request for its small
group market and HHS approved both
requests.147 For the 2022 benefit year,
the state of Alabama submitted 50
percent risk adjustment transfer
reduction requests for its individual
(including catastrophic and noncatastrophic risk pools) and small group
markets, and HHS approved both
requests.148
a. Requests To Reduce Risk Adjustment
Transfers for the 2023 Benefit Year
For the 2023 benefit year, HHS
received requests from Alabama to
reduce risk adjustment state transfers for
its individual and small group markets
by 50 percent.149 Alabama asserts that
the state payment transfer formula
produces imprecise results in Alabama
because of the extremely unbalanced
market share in the individual and
small group markets. Specifically,
Alabama asserts that the presence of a
dominant issuer in the individual and
small group markets precludes the HHSoperated risk adjustment program from
working as precisely as it would with a
more balanced distribution of market
share, which Alabama believes
145 If the state requests that HHS not make
publicly available certain supporting evidence and
analysis because it contains trade secrets or
confidential commercial or financial information
within the meaning of the HHS Freedom of
Information Act (FOIA) regulations at 45 CFR
5.31(d), HHS will only make available on the CMS
website the supporting evidence submitted by the
state that is not a trade secret or confidential
commercial or financial information by posting a
redacted version of the state’s supporting evidence.
See 45 CFR 153.320(d)(3).
146 For an illustration of the state payment
transfer formula, see 86 FR at 24184.
147 See 84 FR 17484–17485 and 85 FR 29193–
29194.
148 See 86 FR 24187–24189.
149 Alabama’s individual market request is for a
50 percent reduction to risk adjustment transfers for
its individual market non-catastrophic and
catastrophic risk pools.
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625
precludes the HHS-operated risk
adjustment program from working as
precisely as it would with a more
balanced distribution of market share.
The state regulators stated that their
review of the issuers’ financial data
suggested that any premium increase
resulting from a reduction to risk
adjustment payments of 50 percent in
the individual market for the 2023
benefit year would not exceed 1 percent,
the de minimis premium increase
threshold set forth in § 153.320(d)(1)(iii)
and (d)(4)(i)(B).
In the small group market request,
Alabama states that its review of the
issuers’ financial data from the 2020
benefit year suggests that any premium
increase resulting from a reduction to
risk adjustment payments of 50 percent
in the small group market for the 2023
benefit year would exceed the de
minimis threshold. However, Alabama
asserts that HHS should consider data
for years prior to 2021 to analyze its
small group market request for the 2023
benefit year because the COVID–19 PHE
renders an analysis based on 2020 data
unreliable. Alabama further notes that
there is no regulatory requirement to
analyze the request using the most
recent available year of data. Alabama
further states that the de minimis
regulatory threshold does not work
when a small issuer receives a risk
adjustment payment, and that the test
should instead be based on what
percentage market share the large issuer
in Alabama holds compared to the other
issuers in the market.
We seek comment on the requests to
reduce risk adjustment state transfers in
the Alabama individual and small group
markets by 50 percent for the 2023
benefit year. The requests and
additional documentation submitted by
Alabama are posted under the ‘‘State
Flexibility Requests’’ heading at https://
www.cms.gov/CCIIO/Programs-andInitiatives/Premium-StabilizationPrograms/.
b. Repeal of Risk Adjustment State
Flexibility To Request a Reduction in
Risk Adjustment State Transfers
(§ 153.320(d))
We propose to generally repeal the
flexibility for states to request
reductions of transfers calculated by
HHS under the state payment transfer
formula in all state market risk pools
starting with the 2024 benefit year, with
an exception for states that previously
requested a reduction in risk adjustment
state transfers under § 153.320(d).
Section 3 of E.O. 14009 directs HHS,
and the heads of all other executive
departments and agencies with
authorities and responsibilities related
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to Medicaid and the ACA, to review all
existing regulations, orders, guidance
documents, policies, and any other
similar agency actions to determine
whether they are inconsistent with
policy priorities described in Section 1
of E.O. 14009, to include protecting and
strengthening the ACA and making
high-quality health care accessible and
affordable for all individuals.150
Consistent with this directive, we have
been considering whether the risk
adjustment state flexibility under
§ 153.320(d) is inconsistent with
policies described in Sections 1 and 3
of E.O. 14009.
In prior rulemakings, we received
comments stating that this policy does
not strengthen the ACA and requesting
that HHS repeal this policy, as risk
adjustment state flexibility may result in
risk selection, market destabilization,
increased premiums, smaller networks,
and worse plan options. Specifically,
these commenters stated that reducing
transfers to plans with higher-risk
enrollees could create incentives for
issuers to avoid enrolling high-risk
enrollees in the future through
distorting plan offering and designs,
including by avoiding broad network
plans, not offering platinum plans at all,
and only offering limited gold plans.
Commenters further stated that issuers
could also distort plan designs by
excluding coverage or imposing high
cost sharing for certain drugs or
services. Some commenters stated that
the risk adjustment state payment
transfer formula already adjusts for
differences in types of individuals
enrolled in different states and aggregate
differences in prices and utilization by
using the statewide average premium as
a scaling factor, so state flexibility to
account for state-specific factors is
unnecessary.151 The commenters also
generally noted that states that believe
the HHS risk adjustment methodology
does not work properly in their markets
have the option, if they operate their
Exchange, to operate a state-based risk
adjustment program.
Moreover, since HHS finalized the
risk adjustment state flexibility policy in
the 2019 Payment Notice, there have
been changes in Administration policy
priorities. This Administration’s stated
priorities include protecting and
strengthening the ACA, of which the
risk adjustment program is an integral
part, and supporting protections for
people with pre-existing conditions; 152
150 E.O.
14009; 86 FR 7793 (Feb. 2, 2021).
https://www.brookings.edu/wp-content/
uploads/2020/12/
FiedlerLaytonCommentLetterNBPP2022.pdf.
152 Executive Order 14009; 86 FR 7793 (Feb. 2,
2021).
151 See
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in contrast, past Administration
priorities included reducing economic
burden on states and other entities and
maximizing state flexibility.153 Market
participation has also stabilized in
recent years, with new issuers entering
the market and premiums remaining
stable since 2019.154
Following our further consideration of
this policy consistent with the
instructions in the E.O., prior comments
on this policy, and the earlier described
changes, as well as the general low level
of interest states have expressed in the
policy, we propose, beginning for the
2024 benefit year, to repeal the ability
for states to request a reduction in risk
adjustment state transfers of up to 50
percent in any state market risk pool
with an exception for states who
previously requested this flexibility in
prior benefit years. We propose to
effectuate this change by amending the
introductory text to § 153.320(d) to
reflect that this flexibility was available
from the 2020 through 2023 benefit
years for all states and to add a new
second sentence to the introductory text
in § 153.320(d) to capture the proposal
to permit states that previously
participated to request these reductions
beginning with the 2024 benefit year.
In addition, we propose to add new
§ 153.320(d)(5) to define prior
participants as any state that previously
submitted a risk adjustment state
flexibility request for any market risk
pool. We are proposing to create an
exception for states that previously
participated because there is one state,
Alabama, that requested this flexibility
since 2020 (the first benefit year these
requests were permitted). Alabama has
generally been able to demonstrate a de
minimis impact on the market risk pool
in which the reduction in transfers was
requested, meaning any impacted issuer
would not need to increase their
premiums by more than 1 percent to
account for the reduction to risk
adjustment transfers. As explained in
the state’s requests, Alabama has unique
state characteristics, in which there is
an extremely unbalanced market share
in both its individual and small group
153 Executive
Order 13765; 82 FR 8351 (Jan. 24,
2017).
154 See, for example, the 2019, 2020, and 2021
Unified Rate Review Public Use Files, available at
https://www.cms.gov/CCIIO/Resources/DataResources/ratereview. See also the Summary Report
on Permanent Risk Adjustment Transfers for the
2020 Benefit Year, available at https://
www.cms.gov/CCIIO/Programs-and-Initiatives/
Premium-Stabilization-Programs/Downloads/RAReport-BY2020.pdf. See also the Summary Report
on Permanent Risk Adjustment Transfers for the
2019 Benefit year, available at https://
www.cms.gov/CCIIO/Programs-and-Initiatives/
Premium-Stabilization-Programs/Downloads/RAReport-BY2019.pdf.
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markets, with one very dominant issuer
and a few very small competitors that
produces imprecise results under the
HHS risk adjustment methodology,
which is calibrated on a national
dataset.155 We do not believe that
continuing to permit a reduction in risk
adjustment transfers in this state, given
its unique characteristics, undermines
the efficacy of risk adjustment. In
addition, we believe that any minimal
impact on transfers in this state is
outweighed by the benefit of
maintaining and taking steps to support
the state’s effort to maximize
participation in its state market risk
pools that have developed as a result of
this flexibility in prior years, and that
might otherwise only have a single
issuer offering coverage in the absence
of this flexibility.
We note that this proposal to retain
this flexibility for prior participants is
only intended to permit such states to
continue to request risk adjustment state
flexibility in benefit year 2024 and
beyond, not to automatically apply
previously approved transfer reductions
to future benefit years. Under this
proposal, a prior participant will still be
required to submit its request(s) to
reduce risk adjustment state transfers
each year in the timeframe, form, and
manner set forth in § 153.320(d)(1) and
(2), and HHS will continue to evaluate
risk adjustment state flexibility requests
for approval as set forth in
§ 153.320(d)(4). If state requests do not
meet the applicable approval criteria,
HHS will not approve the requests. The
flexibility for HHS to approve a
reduction amount that is lower than the
amount requested by the State in
§ 153.320(d)(4)(ii) would also be
retained.
Finally, for reduction requests for the
2024 benefit year and beyond, we also
propose to remove the option for the
state to demonstrate the state-specific
factors that warrant an adjustment to
more precisely account for relative risk
differences in the state individual
catastrophic, individual noncatastrophic, small group, or merged
155 See Alabama requests for 2020 through 2022
under the Risk Adjustment State Flexibility
Requests heading at https://www.cms.gov/CCIIO/
Programs-and-Initiatives/Premium-StabilizationPrograms. Some of the information in these requests
is redacted in accordance with 45 CFR
153.320(d)(3). If the state requests that HHS not
make publicly available certain supporting
evidence and analysis because it contains trade
secrets or confidential commercial or financial
information within the meaning of the HHS
Freedom of Information Act (FOIA) regulations at
45 CFR 5.31(d), HHS will only make available on
the CMS website the supporting evidence submitted
by the state that is not a trade secret or confidential
commercial or financial information by posting a
redacted version of the state’s supporting evidence.
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market risk pool as one of the
justifications for the state’s request and
one of the criteria for HHS approval.
Instead, we propose to require prior
participants to meet the other existing
criterion that the requested reduction
would have de minimis impact on the
necessary premium increase to cover the
transfers for issuers that would receive
reduced transfer payments, as the sole
justification for the state’s request and
criterion for HHS approval beginning
with 2024 benefit year requests. To
effectuate this change, we propose to
amend paragraph (d)(1)(iii) of § 153.320
to add the phrase ‘‘For the 2020 through
2023 benefit years’’ to reflect that state
requests submitted for those benefit
years must include a justification for the
reduction requested demonstrating
either of the existing criteria, that is, the
state-specific factors that warrant an
adjustment to more precisely account
for relative risk differences in the state
individual catastrophic, individual noncatastrophic, small group, or merged
market risk pool, or that the requested
reduction would have de minimis
impact on the necessary premium
increase to cover the transfers for issuers
that would receive reduced transfer
payments. We also propose to add a
new § 153.320(d)(1)(iv) to capture the
requirement that prior participant
requests beginning with the 2024 benefit
year must include a justification
demonstrating the requested reduction
would have de minimis impact on the
necessary premium increase to cover the
transfers for issuers that would receive
reduced transfer payments. We similarly
propose to amend the standards for HHS
approval under § 153.320(d)(4)(i) to
create a new paragraph (d)(4)(i)(A) to
capture the existing options available
for 2020 through 2023 benefit year
requests and a new paragraph
(d)(4)(i)(B) to capture the new proposed
option that would apply to prior
participants’ requests beginning with
the 2024 benefit year. Retaining the de
minimis standard as the only option for
prior participants to justify the
reduction and for HHS to approve a
request would help ensure that
consumers would not experience an
increase in premiums greater than 1
percent as the result of a state requested
reduction in transfers, which aligns
with the priorities under E.O. 14009 to
ensure that health care remains
affordable for consumers. HHS would
continue to publish any requests
submitted under this revised
framework, make them available for
public comment, and announce any
approved or denied reduction requests
in the applicable benefit year’s HHS
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notice of benefit and payment
parameters, as set forth in
§ 153.320(d)(3).
We seek comment on this proposal to
generally repeal the state flexibility to
request reductions in the transfers
calculated by HHS under the state
payment transfer formula beginning
with 2024 benefit year, with the
exception of states that previously
submitted a risk adjustment state
flexibility request for any market risk
pool. We also seek comment on whether
we should limit this repeal to the
individual market catastrophic and noncatastrophic risk pools (including
merged market states whose issuers
report risk adjustment data in the
individual market) and continue to
permit the submission of these requests
in the small group market only
(including merged market states whose
issuers report risk adjustment data in
the small group market). We further
seek comment on the proposed prior
participant exception, including the
proposed definition for prior
participants. We also seek comment on
the proposal to retain as the only option
for state justification and HHS approval
of requested reductions beginning with
the 2024 benefit year the demonstration
that the requested reduction would have
de minimis impact on the necessary
premium increase to cover the transfers
for issuers that would receive reduced
transfer payments, and to remove the
criterion related to the state
demonstrating the state-specific factors
that warrant an adjustment to more
precisely account for relative risk
differences in the applicable state
market risk pool. Finally, we seek
comment on the health equity impacts
of these proposals, especially for
underserved and minority communities.
5. Risk Adjustment Issuer Data
Requirements (§§ 153.610, 153.700, and
153.710)
In this section, we propose that
issuers collect and make available for
HHS’ extraction from issuers’ EDGE
servers five new data elements—ZIP
code,156 race, ethnicity, an ICHRA
indicator, and a subsidy indicator
(APTC indicator at the policy-level)—as
part of the required risk adjustment data
that issuers must make accessible to
HHS in states where HHS operates the
risk adjustment program,157 beginning
with the 2023 benefit year. We also
propose that beginning with the 2022
benefit year, HHS would extract from
156 ZIP codeTM is a trademark of the United States
Postal Service.
157 HHS has been operating the risk adjustment
program in all 50 states and the District of Columbia
since the 2017 benefit year.
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issuers’ EDGE servers the following
three data elements that issuers already
are required to make accessible to HHS
as part of the required risk adjustment
data: Plan ID (which represents the
HIOS ID, state, product ID, standard
component number, and variant), rating
area, and subscriber indicator. We also
propose to exclude plan ID, ZIP code,
and rating area from the limited data set
HHS makes available to requestors for
research purposes, but include race,
ethnicity, ICHRA indicator, subsidy
indicator, and subscriber indicator in
that limited data set once available.
Lastly, we propose to expand and clarify
the scope of permissible HHS uses for
the data and the reports extracted from
issuer EDGE servers (including data
reports and ad hoc query reports).
Related to these proposals, we also
consider the burden associated with the
proposed collection and extraction of
these data elements and whether there
are any policies that HHS could pursue
to encourage the consistent use and
reporting of ICD–10–CM z codes. The
following subsections provide further
discussion of these proposals.
a. Background
Section 1343(b) of the ACA provides
that the Secretary, in consultation with
States, shall establish criteria and
methods to be used in carrying out the
risk adjustment activities under this
section. Consistent with section 1321(c)
of the ACA, the Secretary is responsible
for operating the risk adjustment
program in any state that fails to do
so.158 45 CFR 153.610(a) requires that
health insurance issuers of risk
adjustment covered plans submit or
make accessible all required risk
adjustment data in accordance with the
data collection approach established by
HHS 159 in states where HHS operates
the program on behalf of a state. In the
2014 Payment Notice, HHS established
an approach for obtaining the necessary
data for risk adjustment calculations in
states where HHS operates the program
through a distributed data collection
model that prevented the transfer of
individuals’ personally identifiable
information (PII).160 Since the 2016
benefit year, HHS required issuers of
risk adjustment covered plans to submit
95 data elements to their EDGE servers
158 In the 2014 through 2016 benefit years, HHS
operated the risk adjustment program in every state
and the District of Columbia, except Massachusetts.
Beginning with the 2017 benefit year, HHS has
operated the risk adjustment program in all 50
states and the District of Columbia.
159 Also see 45 CFR 153.700–153.740.
160 See 78 FR at 15497–15500 and 45 CFR
153.720.
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to support the HHS’ calculation of risk
adjustment transfers.161
Then, in the 2018 Payment Notice, we
finalized policies for the extraction and
use of enrollee-level EDGE data
beginning with the 2016 benefit year.162
The purpose of collecting and extracting
enrollee-level EDGE data was to provide
HHS with more granular data to use to
recalibrate the HHS risk adjustment
models and to use actual data from
issuers’ individual and small group (and
merged) market populations, as opposed
to the MarketScan® commercial
database that approximates these
populations, for model recalibration
purposes. We also finalized the use of
the extracted enrollee-level EDGE data
to inform development of the AV
Calculator and methodology and noted
the data could be a valuable source for
calibrating other HHS programs in the
individual and small group markets. In
the 2020 Payment Notice, we expanded
the permitted uses of the extracted
enrollee-level EDGE data to provide that
HHS may use these data and the reports
extracted from issuers’ EDGE servers
(including data reports and ad hoc
query reports) to calibrate and
operationalize our individual and small
group (including merged) market
programs, including to recalibrate the
HHS risk adjustment models, to inform
updates to the AV Calculator, and to
conduct policy analysis for the
individual and small group (including
merged) markets.163 These additional
uses of the enrollee-level EDGE data and
reports enhance HHS’ ability to develop
and set policy for the individual and
small group (including merged) markets
and avoid the need to pursue alternative
burdensome data collections from
issuers.164
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b. Proposed Collection and Extraction of
New Data Elements and Extraction of
Current Data Elements
Based on our experience accessing
EDGE server data for the risk adjustment
model recalibration and analytics
purposes, and as part of our ongoing
efforts to continuously improve HHS
programs, we propose to collect and
161 The full list of required data elements can be
found in Appendix A of OMB control number
0938–1155 (Standards Related to Reinsurance, Risk
Corridors, and Risk Adjustment (CMS–10401)),
which is currently being updated. The current
Appendix A is available at https://omb.report/icr/
201712-0938-015/doc/79644301.pdf. The previous
version is available at https://www.reginfo.gov/
public/do/PRAViewICR?ref_nbr=201712-0938-015.
162 81 FR 94058 at 94101.
163 84 FR 17454, 17488.
164 We also clarified that our policies regarding
HHS uses of the enrollee-level EDGE data apply to
the HHS components that currently receive and use
such data for purposes of the HHS risk adjustment
program. See ibid at 17488.
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extract new data elements from issuers’
EDGE servers through issuers’ EDGE
Server Enrollment Submission (ESES)
files and risk adjustment recalibration
enrollment files, specifically: (1) ZIP
code, (2) race, (3) ethnicity, (4) subsidy
indicator, and (5) ICHRA indicator. For
race and ethnicity data, we propose to
require issuers to report race and
ethnicity in accordance with the
October 30, 2011 HHS Implementation
Guidance on Data Collection Standards
for Race, Ethnicity, Sex, Primary
Language, and Disability Status (2011
HHS Data Standards),165 which is
collected at a granular level that would
allow HHS to better analyze more
subpopulations than our current data
allows us to do, thereby allowing us to
consider more areas of health equity, as
well as to better address discrimination
in health care and health disparities.166
We propose to require issuers of risk
adjustment covered plans to submit and
make accessible these new data
elements to HHS in states where HHS
operates the risk adjustment program
beginning with the 2023 benefit year.
Extraction of these new five data
elements as part of the enrollee-level
EDGE data and the reports extracted
from issuers’ EDGE servers (including
data reports and ad hoc query reports)
would begin with the 2023 benefit
year.167 In addition to collecting and
extracting these new data elements, we
also propose to extract plan ID, rating
area, and subscriber indicator as part of
the enrollee-level EDGE data beginning
with the 2022 benefit year data and
reports extracted from issuers’ EDGE
servers. For the plan ID, rating area, and
subscriber indicator, we note that
issuers are already required under
current HHS program requirements to
submit these data elements to their
EDGE servers.168
Collecting and extracting these new
and current data elements would allow
HHS to further assess and analyze
actuarial risk and risk patterns in the
165 https://aspe.hhs.gov/reports/hhsimplementation-guidance-data-collectionstandards-race-ethnicity-sex-primary-languagedisability-0.
166 As detailed further later in this preamble,
issuers would have the option of selecting
‘‘unknown’’ for this data element if they do not
have this information for a particular enrollee.
167 The deadline for submission of 2023 benefit
year risk adjustment data submissions is April 30,
2024. See 45 CFR 153.730.
168 The full list of required data elements can be
found in Appendix A of OMB control number
0938–1155 (Standards Related to Reinsurance, Risk
Corridors, and Risk Adjustment (CMS–10401)),
which is currently being updated. The current
Appendix A is available at https://omb.report/icr/
201712-0938-015/doc/79644301.pdf. The previous
version is available at https://www.reginfo.gov/
public/do/PRAViewICR?ref_nbr=201712-0938-015.
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individual, small group, and merged
markets, and determine if, based on
future analysis, any refinements to the
HHS risk adjustment methodology, the
AV Calculator, or other HHS individual
or small group (including merged)
market programs should be proposed
through notice-and-comment
rulemaking. For example, we propose to
collect and extract the ICHRA indicator
to conduct analyses on whether there
are any unique actuarial characteristics
of the ICHRA population 169 and to
examine if employers with sicker
enrollees are more attracted to offering
ICHRAs, and if ICHRA enrollment is
impacting state individual (or merged)
market risk pools. We similarly want to
examine whether there are any risk
patterns or impacts when analyzing risk
adjustment data using ZIP codes, race,
ethnicity, and the subsidy indicator. For
example, we are interested in
conducting analysis on whether there
are any cost differentials for certain
conditions based on race, ethnicity or
subsidy indicator. For the three current
data elements that we are proposing to
newly extract, our purpose would be to
similarly use these data to further assess
risk patterns and the impact of risk
adjustment policies. For example, the
extraction of rating area data would
provide HHS with more granular data to
assess risk patterns and impacts based
on geographic differences. In addition,
the proposal to newly extract plan ID
and subscriber indicator from issuers’
EDGE servers would allow HHS to be
able to simulate transfers using the
enrollee-level data, which is currently
not possible without the plan ID.170
We believe these proposed data
collections and extractions would serve
the compelling government interest of
promoting equity in health coverage and
care, as well as the ACA’s goal of
making high-quality health care
accessible and affordable for all
individuals. Specifically, we believe
that the collection and extraction of
these new data elements would allow
HHS to analyze and assess health equity
169 Currently, HHS only collects information on
an enrollee’s ICHRA status in connection with a
special enrollment period eligibility determination
for Exchanges, which does not provide us with
complete data.
170 For the transfer simulation of the combined
model specification changes, HHS was not able to
use the available enrollee-level EDGE datasets.
Instead, issuers needed to run multiple EDGE Ad
Hoc commands on their respective EDGE servers for
the simulation to be successful. See Section 5.2 of
the 2021 RA Technical Paper, available at https://
www.cms.gov/files/document/2021-ra-technicalpaper.pdf and the HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes:
Summary Results for Transfer Simulations,
available at https://www.cms.gov/CCIIO/Programsand-Initiatives/Premium-Stabilization-Programs.
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impacts more than current data allow.
Consistent with Executive Order 13985,
‘‘Advancing Racial Equity and Support
for Underserved Communities Through
the Federal Government,’’ 171 we believe
this proposal would facilitate our ability
to assess the extent to which specific
communities experience barriers or
challenges in accessing benefits and
opportunities available related to our
individual, small group, and merged
market programs. This proposed data
collection could also facilitate our
ability to assess whether new policies,
regulation, or guidance may be
necessary or appropriate to further
advance equity within our programs in
the individual, small group and merged
markets. We believe that the proposed
collection and extraction of these data
elements is narrowly tailored to serve
this compelling government interest
because this is the minimum data
anticipated at this time that would
allow HHS to further assess and analyze
actuarial risk and risk patterns in the
individual, small group, and merged
markets. Consistent with the policy
adopted in the 2020 Payment Notice
regarding the use of data and reports
extracted from issuer EGDE servers
(including data reports and ad hoc
query reports), and our proposal below
to expand the permissible HHS uses of
such data and reports, we would collect,
extract and use these new and current
data elements to conduct policy analysis
for HHS programs in the individual and
small group (including merged) markets
and to inform policy analyses and
improve the integrity of other HHS
federal health-related programs to the
extent such use is otherwise authorized
by, required under, or not inconsistent
with applicable federal law.
In the proposed 2020 Payment Notice,
we sought comment on the advantages
and disadvantages of extracting state
and rating area data as part of the
enrollee-level EDGE data for use to
recalibrate the HHS-operated risk
adjustment models, to inform updates to
the AV Calculator and methodology,
and to conduct policy analyses for other
HHS individual and small group
(including merged) market programs.172
We explained that extracting these
geographic details could enable HHS to
assess the impact of differences in
geographic factors in the HHS risk
adjustment methodology and to better
estimate the AV of plans based on cost
differences across regions. We also
noted that extraction of geographic
details (state and rating area) could help
support other HHS programs and policy
priorities, as well as provide additional
data elements for researchers. However,
after consideration and review of the
public comments received on the
proposed 2020 Payment Notice, we did
not finalize the proposed extraction of
these data elements. We explained that,
at that time, in response to stakeholder
feedback, we did not believe that the
benefits of these additional data element
extractions would outweigh the
potential increased risk to issuers’
proprietary information and increased
issuer burden.173
However, in light of E.O. 13985 and
E.O. 14009, we have continued to
consider whether extraction of these
data elements would support and
enhance HHS’ policy analysis
capabilities with regard to the HHS risk
adjustment program, as well as other
HHS individual and small group
(including merged) market programs
that seek to provide access to health
care to consumers. Based on this further
analysis and consideration, HHS has
determined that the proposed extraction
of rating area data, along with the
proposed collection and extraction of
the other data elements discussed in
this proposal, align with the policy
goals in E.O. 13985 and E.O. 14009 and
would provide HHS with more granular
data to help improve HHS’ analytical
capacity to assess equity impacts of
programs impacted by this proposed
rule, including our capacity to identify
potential refinements to the HHS risk
adjustment methodology, consider
policy and operational changes to
improve other HHS individual and
small group (including merged) market
programs, and identify ways to address
health equity issues in these programs.
For example, HHS believes that analysis
of the additional data elements
proposed for collection and extraction
from issuers’ EDGE servers would help
HHS better monitor trends in the health
insurance markets, inform HHS analyses
of whether updates to the QHP
certification review processes would be
necessary or appropriate,174 and inform
QHP compliance reviews and
subregulatory guidance. HHS also is of
the view that the additional data
elements proposed for collection and
extraction from EDGE servers could be
173 84
FR 17454 at 17488.
year, HHS provides an overview of its
QHP certification review processes in the annual
Letter to Issuers in the FFEs. The 2022 Final Letter
to Issuers in the FFEs is available at https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/Final-2022-Letter-to-Issuersin-the-Federally-facilitated-Marketplaces.pdf.
174 Each
171 E.O. 13985 is 86 FR 7009 available at https://
www.federalregister.gov/documents/2021/01/25/
2021-01753/advancing-racial-equity-and-supportfor-underserved-communities-through-the-federalgovernment.
172 84 FR 227 at 251.
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629
valuable in assessing policy and
operational issues in connection with
programs that are not centered around
the individual or small group (including
merged) commercial health insurance
markets, such as the wrap-around QHP
coverage offered to Medicaid expansion
populations in some states 175 and
coverage offered by non-federal
governmental plans.176
Additionally, HHS continually
considers methods and mechanisms to
identify discriminatory practices in the
commercial health insurance markets
and HHS federal health-related
programs. The additional data we
propose to collect and extract from
issuers’ EDGE servers also would inform
future policy to better address
discrimination and other systemic
barriers in health care and health
disparities that may exist in connection
with coverage offered in the commercial
health insurance markets, as well as in
other HHS federal health-related
programs that do not focus on
commercial health insurance.
For all of the reasons discussed in this
section, HHS proposes to collect and
extract the proposed five new data
elements outlined above as part of the
required risk adjustment data issuers
must make accessible to HHS through
their respective EDGE servers beginning
with the 2023 benefit year. We also
propose to extract plan ID, rating area,
and subscriber indicator as part of the
EDGE enrollee-level data set beginning
with the 2022 benefit year.177 We note
that any changes to the risk adjustment
methodology or other policies based on
HHS’s analysis of these data would be
set forth in notice and comment
rulemaking.
We seek comments on these
proposals, including feedback
specifically on whether we should
extract only certain portions of the plan
ID, such as the five-digit HIOS ID, twocharacter state ID, three-digit product
number, four-digit standard component
175 See, e.g., https://www.medicaid.gov/medicaid/
downloads/wraparound-benefits.pdf.
176 Non-federal governmental plans are subject to
many PHS Act federal market reform requirements.
See, e.g., 42 U.S.C. 300gg–21(a)(1)(A). Also see 42
U.S.C. 300bb–1, et seq. HHS is generally
responsible for enforcement of provisions of the
PHS Act that apply to non-federal governmental
plans. See, e.g., 42 U.S.C. 300gg–22(b)(1)(B) and 45
CFR 150.301, et seq.
177 We propose to extract plan ID, rating area, and
subscriber indicator for the 2022 benefit year,
which is one year earlier than we propose to extract
the other five new data elements, because issuers
already submit plan ID, rating area, and subscriber
indicator to their EDGE servers.
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number, two-digit variant ID, or any
combination thereof.178
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c. Limited Data Set
In conjunction with the proposed
collection and extraction of the new and
current data elements in this proposed
rule, we propose to exclude plan ID, ZIP
code, and rating area from the limited
data set containing enrollee-level EDGE
data that HHS makes available to
qualified researchers.179 However, we
propose to include race, ethnicity,
ICHRA indicator, subsidy indicator, and
subscriber indicator in the limited data
set once they are available.180 In the
2020 Payment Notice, we finalized our
proposal to create on an annual basis a
limited data set file using masked
enrollee-level data submitted to HHS
from issuers’ EDGE servers. The limited
data set file is made available to
requestors who seek the data for
research purposes only.181 We adopted
this policy because we believed making
the limited data set file available to
qualified researchers upon request
would increase understanding of these
markets and contribute to greater
transparency. HHS strictly adheres to all
the requirements and CMS guidelines
related to providing the limited data set
to qualified researchers, including
requiring the recipient of the limited
data set to enter into a data use
agreement that establishes the permitted
uses or disclosures of the information
and prohibits the recipient from
identifying the information. We believe
that including race, ethnicity, ICHRA
indicator, subsidy indicator, and
subscriber indicator would enhance the
usefulness of the limited data set for
research and would continue to protect
enrollees’ PII and issuers’ proprietary
178 For additional explanation of the plan ID
components, see pg. 42 of the CMS Standard
Companion Guide Transaction Information:
Instructions related to the ASC X12 Benefit
Enrollment and Maintenance (834) transaction,
based on the 005010X220 Implementation Guide
and its associated 005010X220A1 addenda for the
FFE, available at https://www.cms.gov/cciio/
resources/regulations-and-guidance/downloads/
companion-guide-for-ffe-enrollment-transactionv15.pdf.
179 See 84 FR at 17487.
180 As proposed, the subscriber indicator would
be included in the enrollee-level data HHS extracts
from issuer EDGE servers beginning with the 2022
benefit year; therefore, this new data field would be
included beginning with the 2022 benefit year
limited data set. As proposed, race, ethnicity,
ICHRA indicator, and subsidy indicator would be
included in the enrollee-level data HHS extracts
from issuer EDGE servers beginning with the 2023
benefit year; therefore, these data fields would be
included beginning with the 2023 benefit year
limited data set.
181 As explained in the 2020 Payment Notice, we
do not currently make the limited data set available
to requestors for public health or health care
operation activities. See 84 FR at 17488.
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information. Although we believe that
including plan ID, ZIP code, and rating
area in the limited data set similarly
would enhance the usefulness of the
limited data set, we believe this would
raise significant concerns for issuers
given previous comments noting the
competitive and proprietary nature of
these geographic identifiers. We
therefore propose to not include these
geographic identifiers as part of the
limited data set that HHS makes
available to qualified researchers upon
request. We seek comments on the
proposal to exclude plan ID, ZIP code,
and rating area, and to include race,
ethnicity, ICHRA indicator, subsidy
indicator, and subscriber indicator as
part of the enrollee-level EDGE limited
data set made available to qualified
researchers upon request. We seek
comment on this proposal, including
about whether collecting race and
ethnicity data in accordance with the
2011 HHS Data Standards would require
systems changes and about any costs
associated with such changes. If
finalized as proposed, race, ethnicity,
the ICHRA indicator, and the subsidy
indicator would be included beginning
with the 2023 benefit year enrollee-level
EDGE limited data set. Subscriber
indicator would be included beginning
with the 2022 benefit year enrollee-level
EDGE limited data set if the proposal to
extract that data element is finalized as
proposed. We appreciate the
sensitivities related to enrollee-level
EDGE data and the importance of
ensuring that our policies continue to
safeguard enrollees’ privacy and
security and issuers’ proprietary
information. Thus, we are particularly
interested in feedback on any privacy or
confidentiality concerns with including
these elements in the limited data set
made available to qualified researchers
upon request.
d. Proposal To Expand Permissible Uses
of EDGE Data
We also propose to expand the
permitted uses of the data and reports
(including data reports and ad hoc
query reports) extracted from issuers’
EDGE servers to include other HHS
federal health-related programs outside
of the commercial individual and small
group (including merged) markets. This
proposed expansion would apply to
data that HHS already collects as well
as the proposed collection and
extraction of ZIP code, race, ethnicity,
subsidy indicator, ICHRA indicator,
plan ID, rating area, and subscriber
indicator as outlined in this rule. The
proposed expansion to the permitted
uses of the EDGE data and reports
would apply as of the effective date of
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the final rule. Specifically, HHS
proposes to expand the uses of the data
and reports HHS extracts from issuers’
EDGE servers to include not only the
specific uses for purposes we identified
in the 2020 Payment Notice 182—that is,
to calibrate and operationalize our
individual and small group (including
merged) market programs (including
assessing risk in the market for risk
adjustment purposes and informing
updates to the AV Calculator), and to
conduct policy analysis for the
individual and small group (including
merged) markets—but also for the
purposes of informing policy analyses
and improving the integrity of other
HHS federal health-related programs, to
the extent such use of the data is
otherwise authorized by, required
under, or not inconsistent with
applicable federal law. For example,
certain states have wrap-around
coverage that include enrolling their
Medicaid expansion populations in
QHPs and those enrollees are currently
reflected in the enrollee-level EDGE
data. Under this proposal to expand the
permitted uses of EDGE data and
reports, it would be clear that HHS
could use this information to inform
policy analyses and improve the
integrity of these Medicaid expansion
population approaches. Similarly, to the
extent appropriate, this proposal would
allow HHS to use the EDGE data and
reports to inform policy analyses related
to PHS Act requirements enforced by
HHS that are applicable market-wide 183
and those that are applicable to nonfederal governmental plans.184
Consistent with our current policy, the
proposals in this rule related to HHS use
of the enrollee-level EDGE data and
reports would apply to the HHS
components that currently receive and
use such data for purposes of the HHS
risk adjustment program. Other
government components would be able
to request the enrollee-level EDGE
limited data set file for research, as that
term is defined under § 164.501. We
also note that the enrollee-level EDGE
data, including the data elements
proposed for collection and extraction
in this rule, may be subject to disclosure
as otherwise required by law.185
182 See
84 FR 17488.
for example, 42 U.S.C. 300gg–300gg–28.
184 Non-federal governmental plans are subject to
many PHS Act federal market reform requirements.
See, e.g., 42 U.S.C. 300gg–21(a)(1)(A). Also see 42
U.S.C. 300bb–1, et seq. HHS is generally
responsible for enforcement of provisions of the
PHS Act that apply to non-federal governmental
plans. See, e.g., 42 U.S.C. 300gg–22(b)(1)(B) and 45
CFR 150.301, et seq.
185 See, for example, 2 U.S.C. 601(d).
183 See,
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We note that any changes to our
policies that result from analysis of
these data, such as using the data to
modify the state payment transfer
formula, would be subject to notice and
comment rulemaking. Furthermore, we
would not use the additional data
elements or any analysis of them to
pursue changes to our policies until we
conduct thorough data quality checks.
For example, in submitting data on race
and ethnicity, issuers would have the
option of selecting ‘‘unknown’’ for these
data elements and we would ensure an
adequate response rate before
conducting analyses that could inform
policy decisions. We would similarly
ensure an adequate response rate with
respect to submission of the ICHRA
indicator before conducting analyses
that could inform policy decisions.186
We solicit comment on this proposal to
expand the permitted uses of the
enrollee-level EDGE data.
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e. Burden for Collecting and Extracting
Additional Data Elements
As stated above, we propose to extract
plan ID, rating area, and subscriber
indicator from issuers’ EDGE servers to
consider for use in risk adjustment
model recalibration and other potential
refinements to the HHS-operated risk
adjustment program, as well as to
conduct policy analysis for HHS federal
health-related programs, including those
related to the individual and small
group (including merged) health
insurance markets and HHS noncommercial market programs, beginning
with the 2022 benefit year. While
collecting additional data elements may
represent increased burden for issuers,
there would be little to no additional
issuer burden related to extracting these
three proposed data elements because
HHS extracts and stores the data, and
issuers would only be required to
execute a command provided by HHS to
generate the EDGE report(s) containing
all required data elements. Since issuers
are already required to include these
three data elements (plan ID, rating area,
and subscriber indicator) as part of the
required risk adjustment submissions to
their respective EDGE servers, we
believe there would be little to no
additional burden associated with the
proposed extraction of these three data
elements beginning with the 2022
benefit year.
As stated above, we also propose to
require issuers to include five new data
elements—ZIP code, race, ethnicity, an
186 As detailed later, we propose to adopt a
transition approach for the ICHRA indicator, which
would make this data field optional for the 2023
and 2024 benefit years.
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ICHRA indicator, and a subsidy
indicator—as part of their risk
adjustment submissions to issuer EDGE
servers beginning with the 2023 benefit
year. We believe issuers currently
collect ZIP codes; therefore, the burden
associated with the proposed collection
of this data element through issuer
EDGE servers would only be the
additional effort and expense for issuers
to compile and submit this additional
data element to their EDGE servers, as
well as to retain this data element as
part of their risk adjustment records as
required under § 153.620(b). Because
the subsidy indicator is derived from
existing data,187 we believe the burden
would again only be the additional
effort and expense for issuers to compile
and submit this data element to their
EDGE servers, as well as to retain this
data element as part of their risk
adjustment records as required under
§ 153.620(b). In contrast, we do not
believe information to populate the
ICHRA indicator is routinely collected
by all issuers at this time; therefore, in
recognition of the burden that collection
of this new data element potentially
would pose for some issuers, we
propose to make submission of the
ICHRA indicator on issuers’ EDGE
servers optional for the 2023 and 2024
benefit years. This transitional approach
for the ICHRA indicator would be
similar to how we have handled other
new data collection requirements 188
and would allow issuers additional time
to develop processes for collection,
validation and submission of this new
data field before it is required.
We believe that most issuers currently
collect race and ethnicity data in some
manner, and therefore the burden
associated with the collection of this
information through issuer EDGE
servers would only be the additional
effort and expense for issuers to compile
and submit these additional data
elements to their EDGE servers and
retain these data elements as part of
their risk adjustment records as required
under § 153.620(b). However, we are
interested in comments on the
collection of these data elements,
187 Subsidy indicator is derived from the
Marketplace enrollment data communicated to
issuers where this data provides the APTC amount
for an enrollee. Issuers would be able to use this
information to derive the subsidy indicator for each
enrollee.
188 For example, HHS did not penalize issuers for
temporarily submitting a default value for the in/
out-of-network indicator for the 2018 benefit year
in order to give issuers time to make the necessary
changes to their operations and systems to comply
with the new data collection requirement, but
required issuers to provide full and accurate
information for the in/out-of-network indicator
beginning with the 2019 benefit year.
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issuers’ rate of collections of these data
elements in accordance with the 2011
HHS Data Standards 189 and whether
there are any considerations about the
availability and current collection of
these data elements that HHS should be
aware of, given that these data fields are
often an optional field on health
insurance application and enrollment
forms.190 We also acknowledge that
some of these new proposed data
elements, such as race and ethnicity and
the ICHRA indicator, may be collected
by HHS from FFE or SBE–FP enrollees
through the QHP application process
and from State Exchange enrollees
through the State Exchange enrollment
and payment files and our intention
would be to structure these data
elements similar to current collections,
where possible. However, this proposal
would require all issuers of risk
adjustment covered plans to make these
data elements accessible to HHS
through their EDGE servers as part of
the required risk adjustment data
submissions in states where HHS
operates the risk adjustment program.
The data that issuers submit to their
EDGE servers would be more uniform
and comprehensive than information
submitted by FFE and SBE–FP enrollees
on a QHP application and by State
Exchange enrollees through enrollment
and payment files, as it would represent
all enrollees in risk adjustment covered
plans, including coverage offered inside
and outside of Exchanges. By collecting
these data as part of the required risk
adjustment data issuers submit to their
respective EDGE servers, HHS would
also have the ability to extract and
aggregate these data elements with other
claims and enrollment data accessible
through issuer EDGE servers, which
would not be possible with the data
collected from consumers through other
processes because the EDGE data is
masked 191 and therefore cannot be
linked with other sources. We
considered the possibility of using data
imputation methods with existing
HealthCare.gov application data to
construct a simulated dataset and
conduct preliminary exploratory
analysis, but once again determined that
189 HHS Implementation Guidance on Data
Collection Standards for Race, Ethnicity, Sex,
Primary Language, and Disability Status | ASPE See
HHS Implementation Guidance on Data Collection
Standards for Race, Ethnicity, Sex, Primary
Language, and Disability Status | ASPE, available at
https://aspe.hhs.gov/reports/hhs-implementationguidance-data-collection-standards-race-ethnicitysex-primary-language-disability-0.
190 Race and ethnicity questions, for example, are
optional on the HealthCare.gov application. See
https://www.reginfo.gov/public/do/PRAICList?ref_
nbr=201903-0938-016 (Attachment A, page 27–28).
191 45 CFR 153.720.
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we would be unable to impute data from
the applications due to the EDGE data
being masked. We therefore do not view
this as a duplicative data collection. Our
proposal also would ensure HHS has
access to the same information in the
same format for on- and off-Exchange
enrollments, as well as across all
Exchange types—FFEs, SBE–FPs and
State Exchanges—for the individual,
small group and merged markets.
To fully assess the additional issuer
burden resulting from this proposal, we
seek comment on the relative value of
the additional data elements we propose
to require when compared to other data
elements we could propose to collect.
For instance, we seek comment on
whether HHS should consider collecting
county data in lieu of ZIP code, and also
solicit comment on whether HHS
should consider requiring issuers to
report census tract data, instead of ZIP
codes or county data. Specifically, we
understand that five-digit ZIP codes can
change on a regular basis, which could
limit the usefulness of this data element
when comparing data across benefit
years. Census tract data or county data,
therefore, may be more useful. We also
clarify that, while race and ethnicity
would be required data submission
elements under these proposals, issuers
would have the option of selecting
‘‘unknown’’ for this data element, which
aligns with the approach taken for
application and enrollment forms. In
other words, issuers would not be
penalized if they did not have the data
for a particular enrollee. Instead, this
proposal is designed to require the
submission of race and ethnicity data if
a particular enrollee provided it to their
respective issuer. We also seek comment
on how issuers may already be
collecting data on race and ethnicity in
order to identify alternatives that HHS
could consider to further ease the
burden of this collection while also
meeting the stated goals of collecting
data to analyze more subpopulations
than the current data allows, consider
more areas of health equity, and better
address discrimination in health care
and health disparities.
f. Encouraging the Use of Z Codes
We seek comment on the collection
and extraction of z codes (particularly
Z55–Z65), a subset of ICD–10–CM
encounter reason codes used to identify,
analyze, and document social
determinants of health.192 We are
192 See CMS Infographic: Using Z Codes: The
Social Determinants of Health; Data Journey to
Better Outcomes, available at https://www.cms.gov/
files/document/zcodes-infographic.pdf, last
accessed Nov. 5, 2021. See also Utilization of Z
Codes for Social Determinants of Health Among
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currently collecting z codes in the
enrollee-level EDGE data and have
started analyzing those codes.193
However, we understand there have
been reports of a lack of consistent use
of z codes by providers 194 and we want
to encourage consistent use of z codes
to help further assess risk in the
individual, small group and merged
market risk pools. We solicit comment
on whether there are policies that HHS
should pursue that could encourage
consistent use of z codes by providers
to support collection and use of the data
for the HHS-operated risk adjustment
program. In light of E.O. 13985 and E.O.
14009, HHS is interested in analyzing z
code data to learn about the relationship
between risk and the social
determinants of health. Finally, we seek
comment on whether there are other
data elements HHS should consider
collecting and extracting to support the
operation of the HHS-operated risk
adjustment program.
6. Risk Adjustment User Fee for 2023
Benefit Year (§ 153.610(f))
HHS proposes a risk adjustment user
fee for the 2023 benefit year of $0.22 per
member per month (PMPM). Under
§ 153.310, if a state is not approved to
operate, or chooses to forgo operating,
its own risk adjustment program, HHS
will operate risk adjustment on its
behalf. As noted previously in this
proposed rule, for the 2023 benefit year,
HHS will be operating the risk
adjustment program in every state and
the District of Columbia. As described
in the 2014 Payment Notice, HHS’
operation of risk adjustment on behalf of
states is funded through a risk
adjustment user fee.195 Section
153.610(f)(2) provides that, where HHS
operates a risk adjustment program on
behalf of a state, an issuer of a risk
adjustment covered plan must remit a
user fee to HHS equal to the product of
its monthly billable member enrollment
in the plan and the PMPM risk
adjustment user fee specified in the
annual HHS notice of benefit and
payment parameters for the applicable
benefit year.
OMB Circular No. A–25 established
federal policy regarding user fees, and
specifies that a user charge will be
Medicare Fee-for-Service Beneficiaries, 2019,
available at https://www.cms.gov/files/document/
zcodes-infographic.pdf.
193 Using the 2019 enrollee-level EDGE data, we
found that only 0.49 percent of the population had
a code within Z55–Z65 range. These enrollees had
higher costs than enrollees without a Z55–Z65 code
across all age/sex and market/metal/CSR categories.
194 See https://journals.lww.com/lwwmedicalcare/Fulltext/2020/12000/Utilization_of_
Social_Determinants_of_Health.2.aspx.
195 78 FR 15409 at 15416–15417.
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assessed against each identifiable
recipient for special benefits derived
from federal activities beyond those
received by the general public. The
HHS-operated risk adjustment program
provides special benefits as defined in
section 6(a)(1)(B) of Circular No. A–25
to issuers of risk adjustment covered
plans because it mitigates the financial
instability associated with potential
adverse risk selection. The risk
adjustment program also contributes to
consumer confidence in the health
insurance industry by helping to
stabilize premiums across the
individual, merged, and small group
markets.
In part 2 of the 2022 Payment Notice
final rule, we calculated the federal
administrative expenses of operating the
risk adjustment program for the 2022
benefit year to result in a risk
adjustment user fee rate of $0.25 PMPM
based on our estimated costs for risk
adjustment operations and estimated
billable member months for individuals
enrolled in risk adjustment covered
plans.196 For the 2023 benefit year, HHS
proposes to use the same methodology
to estimate our administrative expenses
to operate the risk adjustment program.
These costs cover development of the
model and methodology, collections,
payments, account management, data
collection, data validation, program
integrity and audit functions,
operational and fraud analytics,
stakeholder training, operational
support, and administrative and
personnel costs dedicated to risk
adjustment program activities. To
calculate the user fee, we divided HHS’
projected total costs for administering
the risk adjustment program on behalf of
states by the expected number of
billable member months in risk
adjustment covered plans in states
where the HHS-operated risk
adjustment program will apply in the
2023 benefit year.
We estimate that the total cost for
HHS to operate the risk adjustment
program on behalf of states for the 2023
benefit year will be approximately $60
million, and therefore, the proposed risk
adjustment user fee is $0.22 PMPM. The
risk adjustment user fee costs for the
2023 benefit year are expected to remain
steady from the prior 2022 benefit year
estimates. However, we project a small
increase in billable member months in
the individual and small group
(including merged) markets overall in
the 2023 benefit year based on the
enrollment increases observed in the
2020 benefit year prior to
implementation of the ARP in 2021. The
196 86
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assumption that the enhanced premium
tax credit subsidies in section 9661 of
the ARP will expire after the 2022
benefit year significantly influenced our
development of the 2023 enrollment
and premium projections used to
develop the proposed risk adjustment
user fee for the 2023 benefit year. We
expect the expiration of this ARP
provision to revert enrollment
projections to the pre-ARP level
observed in the 2020 benefit year. We
seek comment on the proposed risk
adjustment user fee for the 2023 benefit
year.
7. Compliance With Risk Adjustment
Standards; High-Cost Risk Pool Funds—
Audits of Issuers of Risk Adjustment
Covered Plans (§ 153.620(c))
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HHS proposes that whenever HHS
recoups high-cost risk pool funds as a
result of audits of risk adjustment
covered plans under § 153.620(c)(5)(ii),
the high-cost risk pool funds recouped
from an issuer in an applicable national
high-cost risk pool 197 would be used to
reduce high-cost risk pool charges for
that national high-cost risk pool
beginning for the current benefit year, if
high-cost risk pool payments have not
already been calculated for that benefit
year. If high-cost risk pool payments
have already been calculated for the
current benefit year, we propose to use
the recouped high-cost risk pool funds
to reduce the next applicable benefit
year’s high-cost risk pool charges for all
issuers owing high-cost risk pool
charges for that national high-cost risk
pool.
In part 2 of the 2022 Payment Notice
final rule, HHS codified several
requirements related to the audits and
compliance reviews of risk adjustment
covered plans.198 We did not finalize
our disbursement proposal for high-cost
risk pool payments or charges recovered
by HHS during an audit of a risk
adjustment covered plan under
§ 153.620(c), but stated our intention to
address this issue in future
rulemaking.199 As such, we are
proposing here that any high-cost risk
pool funds recouped through an audit
197 The high-cost risk pool calculation under the
HHS risk adjustment methodology involves two
national risk pools—one for the individual market
(including catastrophic and non-catastrophic plans,
and merged market plans), and another for the
small group market. See, for example, 81 FR at
94080–94082.
198 See 86 FR 24140 at 24287.
199 We proposed that any high-cost risk pool
payments or charges recovered by HHS during an
audit of a risk adjustment covered plan would be
paid on a pro rata basis to other issuers in the
relevant national high-cost risk pool in the form of
a reduced high-cost risk pool charge in the
applicable benefit year. See 85 FR 78572 at 78604.
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under § 153.620(c)(5)(ii) would be
disbursed in the next benefit year for
which high-cost risk pool payments
have not already been calculated, in the
form of reduced charges for all issuers
owing high-cost risk pool charges in the
applicable national high-cost risk pool.
If HHS recoups high-cost risk pool
funds after the current benefit year’s
high-cost risk pool payments have been
calculated, we propose to apply the
high-cost risk pool funds recouped
through an audit under
§ 153.620(c)(5)(ii) to reduce the next
applicable benefit year’s high-cost risk
pool charges for all issuers owing highcost risk pool charges for the applicable
national high-cost risk pool. For
example, if a 2018 high-cost risk pool
audit results in funds being recouped
for the national high-cost risk pool for
the individual market in March 2022,
then these recouped funds would be
disbursed in the form of reduced 2021
benefit year high-cost risk pool charges
for issuers in the national high-cost risk
pool for the individual market because
high-cost risk pool payments for the
2021 benefit year are not calculated
until June 2022. Notwithstanding any
reduction to a national high-cost risk
pool’s charges for a given benefit year,
this proposed policy would not impact
the amount of high-cost risk pool
payments made to eligible issuers,
because the reduction in charges is due
to the recoupment of funds as the result
of an audit of a prior benefit year rather
than a change in payments for the given
benefit year. In addition, the calculation
of high-cost risk pool charges and
payments will continue to be calculated
in accordance with the established
policies, terms and factors.200 201 We
believe this proposal is consistent with
our general policy that HHS would not
rerun or otherwise recalculate high-cost
risk pool charges and payments for the
applicable benefit year if monies are
recouped as a result of an audit under
§ 153.620(c).202
We also clarify that when HHS
recoups high-cost risk pool funds as a
result of an audit, the issuer subject to
the audit would then be responsible for
reporting that adjustment to its highcost risk pool payments or charges in
the next MLR reporting cycle consistent
200 See 81 FR 94058, 94081. Also see 84 FR
17454, 17467 (We are finalizing the $1 million
threshold and 60 percent coinsurance rate for 2020
benefit year and beyond without requiring notice
and comment on the high-cost risk pool thresholds
each year.). We are not proposing changes to the
high-cost risk pool parameters for the 2023 benefit
year. Therefore, we would maintain the $1 million
threshold and 60 percent coinsurance rate.
201 For a visual illustration of the high-cost risk
pool terms and factors, see 86 FR at 24184–24185.
202 86 FR 24140 at 24193.
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633
with the applicable instructions in
§ 153.710(h). Additionally, for any
benefit year in which high-cost risk pool
charges are reduced as a result of
recouped audit funds, issuers whose
charge amounts are reduced would
report the high-cost risk pool charges
paid for that benefit year net of
recouped audit funds in the next MLR
reporting cycle consistent with
§ 153.710(h).
We also propose that any high-cost
risk pool funds recouped as a result of
an actionable discrepancy or successful
administrative appeal filed pursuant to
§§ 153.710(d) and 156.1220,
respectively, would be treated the same
way, that is, any high-cost risk pool
funds recouped based on an actionable
discrepancy or successful appeal would
be used to reduce high-cost risk pool
charges for that national high-cost risk
pool for the next benefit year for which
high-cost risk pool payments have not
already been calculated. Additionally,
issuers would similarly be responsible
for reporting any high-cost risk pool
related adjustments that result from the
recoupment of funds due to an
actionable discrepancy or successful
administrative appeal in the next MLR
reporting cycle consistent with
§ 153.710(h).
We seek comment on these proposals.
8. Risk Adjustment Data Validation
Requirements When HHS Operates Risk
Adjustment (HHS–RADV) (§§ 153.350
and 153.630)
To ensure the integrity of the HHSoperated risk adjustment program, HHS
conducts risk adjustment data
validation (HHS–RADV) under
§§ 153.350 and 153.630 in any state
where HHS is operating risk adjustment
on a state’s behalf. 203 The purpose of
HHS–RADV is to ensure issuers are
providing accurate and complete risk
adjustment data to HHS, which is
crucial to the purpose and proper
functioning of the HHS-operated risk
adjustment program. HHS–RADV also
ensures that risk adjustment transfers
reflect verifiable actuarial risk
differences among issuers, rather than
risk score calculations that are based on
poor data quality, thereby helping to
ensure that the HHS-operated risk
adjustment program assesses charges to
issuers with plans with lower-thanaverage actuarial risk while making
payments to issuers with plans with
higher-than-average actuarial risk. HHS–
RADV consists of an IVA and an SVA.
Under § 153.630, each issuer of a risk
203 HHS has operated the risk adjustment program
in all 50 states and the District of Columbia since
the 2017 benefit year.
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adjustment covered plan must engage an
independent IVA entity. The issuer
provides demographic, enrollment,
prescription drug, and medical record
documentation for a sample of enrollees
selected by HHS to the issuer’s IVA
entity. Each issuer’s IVA is followed by
an SVA, which is conducted by an
entity HHS retains to verify the accuracy
of the findings of the IVA. Based on the
findings from the IVA and SVA as
applicable, HHS conducts error
estimation to calculate an error rate.
In the 2020 HHS–RADV Amendments
Rule,204 we described and finalized the
error rate calculation methodology for
HHS–RADV applicable for benefit years
2019 and onward. In this rule, we
propose further refinements to the
HHS–RADV error rate calculation
methodology beginning with the 2021
benefit year and beyond to: (1) Extend
the application of Super HCCs to also
apply to coefficient estimation groups
throughout the HHS–RADV error rate
calculation processes, (2) specify that
the Super HCC will be defined
separately according to the age group
model to which an enrollee is subject,
and (3) constrain to zero any outlier
negative failure rate in a failure rate
group, regardless of whether the outlier
issuer has a negative or positive error
rate.
HHS is committed to ensuring the
integrity and reliability of HHS–RADV
and continuously improving the error
rate calculation methodology and
program requirements. As part of our
ongoing efforts to explore potential
modifications to the HHS–RADV error
rate calculation methodology, we have
identified through our own analysis,
and through feedback from
stakeholders, these areas for further
refinement. We believe these proposals
will better align the calculation and
application of error rates with the intent
of the HHS–RADV program, thereby
enhancing the integrity of HHS–RADV
and the HHS-operated risk adjustment
program.
a. Coefficient Estimation Groups in
Error Estimation
First, we propose to modify our
process for grouping coefficient
estimation groups in error estimation. In
the 2020 HHS–RADV Amendments
Rule,205 we finalized a policy to ensure
that HCCs that share a coefficient
estimation group used in the risk
adjustment models are sorted into the
same failure rate groups by first
aggregating any HCCs that share a
coefficient estimation group into Super
204 85
FR 76979.
85 FR 76979 at 76984–76989.
205 See
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HCCs before applying the HHS–RADV
failure rate group sorting algorithm.
Since implementing the Super HCC
policy, we found there are rare
occasions where there is a minor
misalignment between the calculation of
risk adjustment plan liability risk score
(PLRS) values and HHS–RADV error
estimation. To address these rare
situations, in this rule we propose to
modify the Super HCC policy to apply
the coefficient estimation group logic as
expressed in the applicable benefit
year’s DIY software throughout the
HHS–RADV error rate calculation
methodology, as they are in risk
adjustment. We propose to adopt these
changes beginning with the 2021 benefit
year of HHS–RADV.
The majority of HCCs in a coefficient
estimation group are in the same
hierarchy, but in rare instances an
individual enrollee may be recorded on
an issuer’s EDGE server as having
multiple HCCs in an HCC coefficient
estimation group that do not have a
direct hierarchical relationship to one
another. For example, based on the 2021
DIY software Tables 4 and 6,206 HCC 61
Osteogenesis Imperfecta and Other
Osteodystrophies shares coefficient
estimation group G04 with HCC 62
Congenital/Developmental Skeletal and
Connective Tissue Disorders in the
adult risk adjustment models, but the
two HCCs are not hierarchically related.
However, even if an enrollee has both
unrelated conditions, the enrollee only
receives the coefficient for one of those
conditions in the enrollee’s risk
adjustment risk score calculation
because both conditions share the same
coefficient estimation group.
To further explain, when such HCCs
share a direct hierarchical relationship,
the presence of the more severe
condition nullifies the presence of the
less severe condition; that is, the
enrollee will receive credit in risk
adjustment and HHS–RADV for only the
most severe of the two conditions.
Similarly, in risk adjustment, when
HCCs that share a coefficient estimation
group do not share a direct hierarchical
relationship, an enrollee will have both
HCCs nullified and replaced with a
single instance of a variable indicating
the presence of HCCs in that coefficient
estimation group, as seen in DIY
software Tables 6 and 7, leading to the
enrollee only receiving one indicator of
risk across both conditions. However, in
this latter case, the process of nullifying
and replacing the HCCs with the
206 See, for example, the August 3, 2021 version
of the DIY software is available at https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance.
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variable representing the coefficient
estimation group is not currently
replicated in the calculation of HHS–
RADV failure rates, group adjustment
factors, or enrollee adjustment factors,
so it is possible for an enrollee to be
recorded in their EDGE, IVA, or SVA
data as having both conditions for the
purposes of HHS–RADV.
The nullification and replication
process in the risk adjustment risk score
calculation de-duplicates conditions in
coefficient estimation groups in the
same way that multiple HCCs that share
a hierarchical relationship are deduplicated. However, there is no
analogous de-duplication process for
coefficient estimation groups in HHS–
RADV.207 As such, it is possible for an
enrollee to be recorded as having
multiple conditions in a coefficient
estimation group for HHS–RADV,
requiring the issuer to be able to
validate both conditions to avoid
receiving an HHS–RADV adjustment to
the enrollee’s risk score, even though
the enrollee only received the
coefficient for one of those conditions in
the enrollee’s risk adjustment risk score
calculation. Therefore, beginning with
the 2021 benefit year of HHS–RADV, we
are proposing to extend the Super HCC
policy finalized in the 2020 HHS–RADV
Amendments Rule, such that HHS will
apply the coefficient estimation group
logic as expressed in the applicable
benefit year’s DIY software 208
throughout HHS–RADV error
estimation, rather than just at the sorting
step that assigns HCCs to failure rate
groups. This change would mean that an
issuer would only need to validate one
HCC in a coefficient estimation group to
avoid further impacting an adjustment
to an enrollee’s risk score in HHS–
RADV, aligning with how an enrollee’s
risk score 209 would be calculated under
the state payment transfer formula.
207 It is rare for an enrollee to have two HCCs in
the same coefficient estimation group that are not
also in a hierarchical relationship. This situation
occurred in no more than 0.1 percent of enrollees
sampled for 2017 and 2018 HHS–RADV.
208 In section III.C.8.b. of this proposed rule, we
propose how the coefficient estimation group logic
would be applied to adult, child, and infant
enrollees and discuss alternative application
methodologies.
209 In the application of the coefficient estimation
group logic to HHS–RADV, the definition of
coefficient estimation groups for the infant models
depends upon proposals in section III.C.8.b. of this
proposed rule. If the approach in section III.C.8.b.
is finalized as proposed, Super HCCs for the infant
models would be based on the calculated model
factors used for the infant models, as described in
the applicable benefit year’s DIY software
‘‘Additional Infant Variables’’ table logic (Table 8 of
the 2021 Benefit Year DIY Software). In section
III.C.8.b. of this rule, we also briefly describe
alternative approaches wherein Super HCCs for
infants would be identical to those for the child
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If finalized as proposed, this update to
the Super HCC policy would necessitate
a change to the policy finalized in the
2021 Payment Notice 210 which
amended the outlier identification
process to not consider an issuer as an
outlier in any failure rate group in
which that issuer has fewer than 30
HCCs.211 That policy was developed
based on results of analysis that showed
that if the number of EDGE HCCs per
sample of enrollees was below 30 HCCs,
the implied alpha of our statistical tests
for outliers was higher than our 5
percent target, thereby failing to meet
the threshold for statistical significance.
Moreover, statistical practice often relies
on a standard recommendation
regarding the determination of sample
size, which states that sample sizes
below 30 observations are often
insufficient to assume that the sampling
distribution is normally distributed.212
The 2021 Payment Notice policy was
developed when individual HCCs were
the unit of analysis for calculating
failure rates. However, the proposed
policy in this rule to de-duplicate
coefficient estimation groups in HHS–
RADV would alter the unit of analysis
of failure rates to be de-duplicated
Super HCCs,213 rather than individual
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models, or identical to those for the adult models,
and would involve additional steps analogous to
those described in Chapter 11.3.4 of the 2020
Benefit Year HHS–RADV Protocols, available at
https://www.regtap.info/uploads/library/2020_
RADV_Protocols__042921_5CR_060421.pdf. These
additional steps would not be necessary if the
Super HCCs proposals in this rule to define Super
HCCs separately for adults, children, and infants are
finalized as proposed.
210 85 FR at 29196 through 29198.
211 Under the outlier identification policy
finalized in the 2021 Payment Notice, data from an
issuer who has fewer than 30 HCCs in a failure rate
group is included in the calculation of national
metrics for that failure rate group, including the
national mean failure rate, standard deviation, and
upper and lower confidence interval bounds.
However, the issuer does not have its risk score
adjusted for that group, even if the magnitude of its
failure rate appeared to otherwise be very large
relative to other issuers. In addition, we clarified
that this issuer may be considered an outlier in
other failure rate groups in which it has 30 or more
HCCs.
212 For example, David C. Howell, ‘‘Hypothesis
Tests Applied to Means’’ In Statistical Methods for
Psychology (8th Ed.), 177–228. Belmont, CA:
Wadsworth, 2010.
213 If the approach in section III.C.8.b. is finalized
as proposed, Super HCCs for the infant models
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HCCs. Although the unit of analysis
would have changed, the underlying
issue with sample size in the outlier
identification process would remain the
same. As such, as a part of this proposal,
we propose to generally maintain the
outlier identification approach adopted
in the 2021 Payment Notice and propose
to not consider an issuer as an outlier
in any failure rate group in which that
issuer has fewer than 30 de-duplicated
EDGE Super HCCs (which would
include, as proposed below, maturityseverity factors for infant enrollees)
beginning with 2021 benefit year HHS–
RADV. Consistent with the policies
adopted in the 2021 Payment Notice,214
we also propose to continue to include
data from an issuer who has fewer than
30 de-duplicated EDGE Super HCCs in
a failure rate group in the calculation of
national metrics for that failure rate
group, including the national mean
failure rate, standard deviation, and
upper and lower confidence interval
bounds. However, the issuer would not
have its risk score adjusted for that
group, even if the magnitude of its
failure rate appeared to otherwise be
very large relative to other issuers. In
addition, we clarify that under this
proposal this issuer may be considered
an outlier in other failure rate groups in
which it has 30 or more de-duplicated
EDGE Super HCCs.
We seek comment on this proposal
and whether HCCs in coefficient
estimation groups should be deduplicated before they are sorted into
failure rate groups and in all subsequent
stages of HHS–RADV error estimation.
635
b. Defining Super HCCs Separately for
Adults, Children, and Infants
In conjunction with our proposal to
modify the application of coefficient
estimation groups in section III.C.8.a. of
this proposed rule, we also propose to
modify the Super HCC policy to apply
coefficient estimation groups to
enrollees according to the risk
adjustment model to which they are
subject. Under the current Super HCC
policy, coefficient estimation group
logic from the adult models is applied
to all enrollees, including those subject
to the child and infant models.215 As
detailed in the 2020 HHS–RADV
Amendments Rule, we adopted this
approach because the adult models’
HCC coefficient estimation groups will
be applicable to the vast majority of
enrollees 216 and our belief that the use
of HCC coefficient estimation groups
present in the adult risk adjustment
models sufficiently balances the
representativeness and accuracy of HCC
failure rate estimates across the entire
population in aggregate.217
However, there are some differences
in the structure of the risk adjustment
model coefficient estimation groups
between the adult, child, and infant
models that the current approach does
not take into account. For example, the
child and adult risk adjustment models’
coefficient estimation groups for the
2021 benefit year and onward 218 are
almost identical with the exception of
two adult-only coefficient estimation
groups and five child-only coefficient
estimation groups (Table 9).
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would be based on the calculated model factors
used for the infant models, as described in the
applicable benefit year’s DIY software ‘‘Additional
Infant Variables’’ table logic (Table 8 of the 2021
Benefit Year DIY Software). In section III.C.8.b. of
this rule, we also briefly describe alternative
approaches under which Super HCCs for infants
would be identical to those for the child models,
or identical to those for the adult models, and
would involve additional steps analogous to those
described in Chapter 11.3.4 of the 2020 Benefit Year
HHS–RADV Protocols (available at). These
additional steps would not be necessary if the
Super HCCs proposals in this rule proposed to
define Super HCCs separately for adults, children,
and infants are finalized as proposed.
214 85 FR at 29196 through 29198.
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215 See
85 FR at 76984 through 76900.
majority of the population with HCCs in
the HHS–RADV samples are subject to the adult
models (88.3 percent for the 2017 benefit year; 88.7
percent for the 2018 benefit year). For 2017, this
was calculated after removing issuers in
Massachusetts and incorporating cases where
issuers failed pairwise and the SVA subsample was
used.
217 See 85 FR at 76987.
218 Starting in 2021 benefit year, the HHS risk
adjustment models use Version 07 for the HHS–
HCC classification. Prior to the 2021 benefit year,
the HHS risk adjustment models used Version 05
for HHS–HCC classification.
216 The
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Coefficient
Estimation
Group
Used in Model
Adull
Child
HCC
HCC19
Descriolion
Diabetes with Acute Complications
GOl
.;
.;
HCC20
Diabetes with Chronic Complications
HCC21
Diabetes without Compliclltion
G02B
.;
.;
G02D
.;
G03
G04
G06A
G07A
.;
.;
.;
.;
.;
.;
.;
G08
.;
.;
G09A
.;
.;
G09C
.;
.;
GlO
.;
.;
HCC26
Mucopolysaccharidosis
HCC27
Lipidoses and Glycogenosis
HCC28
Congenital Metabolic Disorders, Not Elsewhere Classified
HCC29
Amyloidosis, Porphyria, and Other Metabolic Disorders
HCC54
Necrotizing Fasciitis
HCC55
Bone/Joint/Muscle Infections/Necrosis
HCC61
Osteogenesis Imperfecta and Other Osteodystrophies
HCC62
HCC67
Congenital/Developmental Skeletal and Connective Tissue
Disorders
Myelodysplastic Syndromes and Myelofibrosis
HCC68
Aplastic Ane1nia
HCC69
HCC70
Acquired Hemolytic Anemia, Including Hemolytic Disease of
Newborn
Sickle Cell Anemia (Hb-SS)
HCC71
Beta Thalassemia Major
HCC73
Combined and Other Severe Immunodeficiencies
HCC74
Disorders of U1e Immune Mechanism
HCC81
Drug Use with Psychotic Complications
HCC82
Drug Use Disorder, Moderate/Severe, or Drug Use wiU1 NonPsvchotic Complications
Alcohol Use wilh Psy cholic Complications
HCC83
Gll
.;
.;
Gl2
.;
.;
Gl3
.;
.;
Gl4
.;
.;
HCC84
HCC 106
Alcohol Use Disorder, Moderate/Severe, or Alcohol Use with
Soecified Non-Psychotic Complications
Traumatic Complete Lesion Ceivical Spinal Cord
HCC 107
Quadriplegia
HCC 108
Traumatic Complete Lesion Dorsal Spinal Cord
HCC 109
Paraplegia
HCC 117
Muscular Dystrophy
HCC 119
Parkinson's, Hunlinglon's, and Spinocerebellar Disease, and
Other Neurodegenerative Disorders
Respiratory Arresl
HCC 126
Gl5A
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Gl6
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.;
.;
Gl7A
.;
.;
Gl8A
.;
.;
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HCC 128
Cardio-Respiratory Failure and Shock, Including Respiratory
Distress Syndromes
Heart Assistive Device/Artificial Heart
HCC 129
Hearl Transplant Slatus/Complicalions
HCC 160
HCC 127
HCC 161 1
Chronic Obstructive Pulmonary Disease, Including
Bronchiectasis
Severe Asthma
HCC 161 2
AsUuna, Except Severe
HCC 187
Chronic Kidney Disease, Stage 5
HCC 188
Chronic Kidney Disease, Severe (Slage 4)
HCC204
Miscarriage with Complications
HCC205
Miscarriage wiU1 No or Minor Complications
HCC207
Pregnancy with Delivery with Major Complications
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
HCC208
Pregnancy with Delivery with Complications
HCC210
(Ongoing) Pregnancy without Delivery with Major
Complications
(Ongoing) Pregnancy without Delivery with Complications
~
HCC211
HCC 137
HCC 138
~
G21
Hypoplastic Left Heart Syndrome and Other Severe Congenital
Heart Disorders
Major Congenital Heart/Circulatory Disorders
HCC 139
G22
~
G23
~
HCC234
Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus,
and Other Congenital Heart/Circulatorv Disorders
Traumatic Amputations and Amputation Complications
HCC254
Amputation Status, Upper Limb or Lower Limb
HCC 131
Acute Myocardial Infarction
HCC 132
Unstable Angina and Other Acute lschemic Heart Disease
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BILLING CODE 4120–01–C
The infant models also are composed
of variables that function analogously to
coefficient estimation groups in that
they can represent the presence of a
large number of HCCs, or just a single
HCC. However, these variables in the
infant models, the severity-maturity
interaction factors, are structured
completely differently from the
coefficient estimation groups in the
adult and child models. We have
continued to consider these issues as we
gained more experience with operating
HHS–RADV and had access to
additional years of HHS–RADV data to
analyze.
In recognition of the differences in
each age group model’s definitions, and
based on the results of further analysis
on the year-over-year stability of sorting
Super HCCs into three failure rate
groups, described below, we propose to
define Super HCCs as:
• The HCC-derived adult model
variables after the application of the
relevant rows in the applicable benefit
year’s DIY software adult variable logic
(for example, for 2021 HHS–RADV, in
the 2021 Benefit Year DIY Software,219
the ‘‘HCC group’’ rows in Table 6:
Additional Adult Variables),
• The HCC-derived child model
variables after the application of the
relevant rows in the applicable benefit
year’s DIY software child variable logic
(for example, for 2021 HHS–RADV, in
the 2021 Benefit Year DIY Software, the
‘‘HCC group’’ rows in Table 7:
Additional Child Variables), and
• The HCC-derived infant model
variables after the application of the
relevant rows in the applicable benefit
year’s DIY software infant variable logic
(for example, for 2021 HHS–RADV, in
219 See, for example, the August 3, 2021 version
of the DIY software is available at https://
www.cms.gov/CCIIO/Resources/Regulations-andGuidance.
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the 2021 Benefit Year DIY Software, the
‘‘Severity level’’, ‘‘Maturity level’’,
‘‘Assign as IHCC AGE1 if needed’’,
‘‘Impose hierarchy’’, and ‘‘Maturity x
severity level interactions’’ rows in
Table 8: Additional Infant Variables).
Under this approach, we would sort the
adult and child coefficient estimation
groups into failure rate groups together,
when they are identical in definition
between the adult and child models,
and independently from one another
when they are not identical. For infant
enrollees, rather than have individual
HCCs sorted into failure rate groups, or
use the adult or child coefficient
estimation group (Super HCC)
definitions, we would sort the infant
enrollees’ maturity-severity level
interaction factors themselves into
failure rate groups as Super HCCs after
they have been de-duplicated. In short,
for the risk adjustment models for 2021
benefit year and onward, using each age
group’s model factors to define Super
HCCs, and sorting adult and child Super
HCCs together when they have identical
definitions, would increase the number
of factors used in sorting from 110
under the current Super HCC grouping
policy established in the 2020 RADV
Amendments Rule to 146 under this
approach. We propose to adopt these
changes to the Super HCC policy
beginning with the 2021 benefit year of
HHS–RADV.
When we established the current
Super HCC grouping policy in the 2020
HHS–RADV Amendments Rule,220 we
acknowledged the possibility of
defining Super HCCs based on each
model separately. Nevertheless, we
proposed and finalized Super HCCs
based on only the adult models due to
concerns that using the child and infant
models separately would result in some
220 See
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infant model Super HCCs with very
small sample sizes, leading to less stable
failure rate group assignments yearover-year. We also finalized a policy to
use the adult models to create Super
HCCs because the adult models’ HCC
coefficient estimation groups will be
applicable to the vast majority of
enrollees (including most children,
considering the strong overlap between
the structure of the adult and child
models) and our belief that the use of
HCC coefficient estimation groups
present in the adult risk adjustment
models sufficiently balances the
representativeness and accuracy of HCC
failure rate estimates across the entire
population in aggregate. However,
simulations run using 2018 HHS–RADV
data 221 have shown that if we were to
use each model’s factor definitions
separately as proposed in this rule, with
adult and child coefficient estimation
groups that have identical definitions
being sorted together, we would expect
93.4 percent of factors for one benefit
year of HHS–RADV to be sorted into the
same failure rate group for the
subsequent benefit year of HHS–RADV.
Similarly, according to our simulation
of 1,000 subsequent years of HHS–
RADV, if we were to base Super HCCs
on the adult models for adults and the
child models for children and infants,
the percentage of factors whose sorting
would remain stable between
subsequent years would be 93.2 percent.
In contrast, and contrary to
expectations, if Super HCCs were only
based on the definitions in the adult
221 The 2018 risk adjustment models, to which
the 2018 HHS–RADV data were subject, were based
on the V05 HHS–HCC classification for the HHS
risk adjustment models, which is the version of the
HHS–HCC classification that applies through the
2020 benefit year. The 2021 risk adjustment models,
to which the 2021 HHS–RADV data will be subject,
were based on the V07 HHS-Condition Categories,
which applies for the 2021 benefit year and beyond.
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638
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models, we would expect only 91.4
percent of factors to remain in the same
failure rate group across subsequent
benefit years.
This analysis demonstrates that the
very small sample sizes for enrollees
subject to the infant models would not
lead to more overall instability if the
Super HCC policy was modified to use
each age group’s model factor
definitions separately, except for where
child and adult coefficient estimation
groups have identical definitions, to
define Super HCCs. In fact, our
continued study of these issues found
that using each model’s factor
definitions separately, except for where
child and adult coefficient estimation
groups have identical definitions, to
define Super HCCs could provide more
stability than using only the adult
models, or a combination of the child
and adult models. In addition, we note
that beginning with the 2021 benefit
year, the risk adjustment models were
updated based on Version 07 (V07) of
the HHS–HCC classification.222 When
the Super HCC policy was first
implemented in the 2020 HHS–RADV
Amendments Rule,223 the risk
adjustment models for the earliest HHS–
RADV benefit years to which the policy
was effective (HHS–RADV benefit years
2019 and 2020) were based on Version
05 (V05) of the HHS–HCC
classification.224 Due to the change in
the HHS–HCC hierarchies in the V07
classification,225 the structure of the
coefficient estimation groups for the
child models for the 2021 benefit year
and beyond differs further from the
structure of the coefficient estimation
groups for the adult models than it did
for the 2019 and 2020 benefit years. For
these reasons, we are proposing to
define Super HCCs based on each age
group’s model factor definitions
separately, except for where child and
adult coefficient estimation groups have
identical definitions, as described in the
relevant rows in the applicable benefit
year’s DIY software adult variable logic
(for example, for 2021 HHS–RADV, in
222 85
FR 29164.
85 FR 76984–76990.
224 See Table 4 of the 2019 DIY software tables,
available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/DIY-Tables2019.04.2020.xlsx. See also Table 4 of the 2020 DIY
software tables, available at https://www.cms.gov/
files/document/hhs-hcc-software-v0520128q2tables-04132021.xlsx.
225 For a discussion of these changes, see 85 FR
at 7098–7101 and 85 FR at 29175–29185. Also see
the Potential Updates to HHS–HCCs for the HHSoperated Risk Adjustment Program (June 17, 2019),
available at https://www.cms.gov/CCIIO/Resources/
Regulations-and-Guidance/Downloads/PotentialUpdates-to-HHS-HCCs-HHS-operated-RiskAdjustment-Program.pdf.
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223 See
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the 2021 Benefit Year DIY Software,226
the ‘‘HCC group’’ rows in Table 6:
Additional Adult Variables), the
relevant rows in the applicable benefit
year’s DIY software child variable logic
(for example, for 2021 HHS–RADV, in
the 2021 Benefit Year DIY Software, the
‘‘HCC group’’ rows in Table 7:
Additional Child Variables), and the
relevant rows in the applicable benefit
year’s DIY software infant variable logic
(for example, for 2021 HHS–RADV, in
the 2021 Benefit Year DIY Software, the
‘‘Severity level’’, ‘‘Maturity level’’,
‘‘Assign as IHCC AGE1 if needed’’,
‘‘Impose hierarchy’’, and ‘‘Maturity x
severity level interactions’’ rows in
Table 8: Additional Infant Variables).
These relevant rows of the applicable
benefit year’s DIY software tables would
be applied such that each instance of a
Super HCC is only counted once per
enrollee, even if that enrollee has
multiple HCCs in that Super HCC.
Furthermore, any payment HCCs that
are not modified by the DIY software
table logic rows referenced above would
be treated as individual Super HCCs,
such that all Super HCCs are aligned
with how their component HCCs are
treated in the risk adjustment models for
the applicable benefit year. We propose
to apply this change beginning with the
2021 benefit year of HHS–RADV.
We seek comment on these proposals
and whether Super HCCs should
continue to be defined for all enrollees
based on only the adult models,227
should be defined for adult enrollees
based on the adult models and for child
and infant enrollees based on the child
models,228 or should be defined for each
age group according to the age group
risk adjustment model to which they are
subject, as proposed.
c. Negative Failure Rate Constraint
In the 2020 HHS–RADV Amendments
Rule,229 we finalized a policy to
constrain outlier issuers’ error rate
calculations to zero in cases when an
issuer is a negative error rate outlier and
226 The August 3, 2021 version of the DIY
software is available at https://www.cms.gov/CCIIO/
Resources/Regulations-and-Guidance.
227 If this alternative approach is adopted, for
infant enrollees, Super HCCs would not align with
the structure of the infant risk adjustment models,
as such the HHS–RADV process would involve
additional steps analogous to those described in
Chapter 11.3.4 of the 2020 Benefit Year HHS–RADV
Protocols (available at https://www.regtap.info/
uploads/library/2020_RADV_Protocols__042921_
5CR_060421.pdf). The additional steps described in
Chapter 11.3.4 of the 2020 Benefit Year HHS–RADV
Protocols would not be necessary if the Super HCCs
proposals in this rule are finalized as proposed such
that infant enrollee Super HCCs are based on the
calculated model factors used for the infant models.
228 Ibid.
229 85 FR at 76994–76998.
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its failure rate is negative, beginning
with 2019 benefit year HHS–RADV. We
finalized this policy in order to
distinguish between low failure rates
due to accurate data submission and
failure rates that have been depressed
through the presence of HCCs in the
audit data that were not present in the
EDGE data. If a negative failure rate is
due to a large number of found HCCs,
it does not reflect accurate reporting
through the EDGE server for risk
adjustment.
In this rule, we propose modifying the
application of that policy beginning
with the 2021 benefit year of HHS–
RADV to constrain to zero the failure
rate of any issuer who is a negative
failure rate outlier in a failure rate
group, regardless of whether the outlier
issuer has a negative or positive error
rate. We believe this proposed policy is
appropriate and necessary to account for
the fact that, because there are three
failure rate groups in HHS–RADV, it is
possible for a positive error rate outlier
issuer to have a negative failure rate in
one failure rate group and a positive
failure rate in another failure rate group.
To address those cases, we propose to
amend the application of the negative
failure rate constraint policy such that,
for the purposes of calculating the group
adjustment factor (GAF), we would
constrain to zero the failure rate of any
failure rate group in which an issuer is
a negative failure rate outlier, regardless
of whether the outlier issuer has an
overall negative or positive error rate.
We propose to adopt this policy
beginning with the 2021 benefit year
HHS–RADV. Although our experience
to date leads us to believe that this
scenario is unlikely to occur often, this
refinement is consistent with the intent
of the policy to reduce potential
incentives for issuers to use HHS–RADV
to identify more HCCs than were
reported to their EDGE servers for an
applicable benefit year.
We seek comment on this proposal.
9. Disbursement of Recouped High-Cost
Risk Pool Funds—Discrepancies of
Issuers of Risk Adjustment Covered
Plans (§ 153.710(d))
HHS proposes that any funds
recouped as a result of an actionable
high-cost risk pool-related discrepancy
under § 153.710(d) would be used to
reduce high cost-risk pool charges for
that national high-cost risk pool for the
current benefit year if high-cost risk
pool payments have not already been
calculated for that benefit year. If highcost risk pool payments have already
been calculated for that benefit year, we
propose to use the high-cost risk pool
funds recouped based on an actionable
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discrepancy to reduce the next
applicable benefit year’s high-cost risk
pool charges for all issuers owing highcost risk pool charges for that national
high-cost risk pool. As elsewhere
discussed in this preamble, under
‘‘High-Cost Risk Pool Funds—Audits of
Issuers of Risk Adjustment Covered
Plans (§ 153.620(c))’’ and ‘‘Disbursement
of Recouped High-Cost Risk Pool
Funds—Administrative Appeals of
Issuers of Risk Adjustment Covered
Plans (§ 156.1220),’’ we also propose
similar disbursement policies for highcost risk pool funds HHS recoups as a
result of audits of risk adjustment
covered plans under § 153.620(c)(5)(ii)
and successful administrative appeals
under § 156.1220(a)(1)(ii). We propose
to treat funds recouped as a result of an
actionable high-cost risk pool-related
discrepancy the same way. That is, the
recouped discrepancy funds would be
used to reduce high-cost risk pool
charges for that market for the next
benefit year for which high-cost risk
pool payments have not already been
calculated. We also clarify that when
HHS recoups high-cost risk pool funds
as a result of an actionable discrepancy,
the issuer that filed the discrepancy
would then be responsible for reporting
that adjustment to its high-cost risk pool
payments or charges in the next MLR
reporting cycle consistent with the
applicable instructions in § 153.710(h).
Additionally, for any benefit year in
which high-cost risk pool charges are
reduced as a result of high-cost risk pool
funds recouped as a result of an
actionable discrepancy, issuers whose
charge amounts are reduced would be
required to report the high-cost risk pool
charges paid for that benefit year net of
recouped audit funds in the next MLR
reporting cycle consistent with
§ 153.710(h).
We seek comment on this proposal.
10. Medical Loss Ratio Reporting
Requirements (§ 153.710(h))
HHS established a framework in prior
rulemakings to guide issuer treatment of
certain payments and charges that could
be subject to reconsideration for
purposes of risk corridors and MLR
reporting.230 For example, because risk
adjustment transfer amounts are factors
in an issuer’s MLR calculations, a delay
in resolving final risk adjustment
payments and charges, including HHS–
RADV adjustments to transfers, could
make it difficult for issuers to comply
with reporting requirements under the
MLR program. A delay in resolving final
risk adjustment transfer amounts could
230 See 45 CFR 153.710(h). Also see 79 FR at
13789–13790 and 81 FR at 12235–12236.
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occur due to audits, actionable
discrepancies, or successful appeals.
Therefore, we clarified in
§ 153.710(h) 231 how issuers should
report certain ACA program amounts
that could be subject to reconsideration
for risk corridors and MLR reporting
purposes. In this rule, we propose to
amend the introductory sentence in
§ 153.710(h)(1) and to add a proposed
new paragraph (h)(1)(v) to separately
address and explicitly capture a
reference to HHS–RADV adjustments to
make clear that HHS expects issuers to
report HHS–RADV adjustments as part
of their MLR reports in the same manner
as they report risk adjustment payment
and charge amounts (including highcost risk pool payments and charges).
That is, notwithstanding any HHS–
RADV discrepancy filed under
§ 153.630(d)(2), or any HHS–RADV
request for reconsideration under
§ 156.1220(a)(1)(vii) and (viii), unless
the dispute has been resolved, issuers
must report, as applicable, the HHS–
RADV adjustment to a risk adjustment
payment or charge as calculated by HHS
in the applicable benefit year’s
Summary Report of Benefit Year Risk
Adjustment Data Validation
Adjustments to Risk Adjustment
Transfers.232 We also propose to add a
reference to HHS–RADV discrepancies
under § 153.630(d)(2) to the
introductory sentence in § 153.710(h)(1).
We propose conforming amendments
to paragraph (h)(2) to add a reference to
HHS–RADV adjustments to address
situations where there could be
subsequent changes to HHS–RADV
adjustments calculated by HHS in the
applicable benefit year’s HHS–RADV
Summary Report of Benefit Year Risk
Adjustment Data Validation
Adjustments to Risk Adjustment
Transfers, such as modifications
resulting from an actionable
discrepancy or successful appeal. In
these situations, an issuer would be
required to report during the current
MLR reporting year any adjustment to
an HHS–RADV adjustment made or
approved by HHS before August 15, or
the next applicable business day, of the
current reporting year unless otherwise
instructed by HHS. Issuers would be
required to report any adjustment to an
HHS–RADV adjustment made or
231 These instructions were previously codified in
45 CFR 153.710(g) and recently redesignated to 45
CFR 153.710(h). See 79 FR at 13789–13790 and 86
FR at 24194–24195.
232 See Table 9 in the part 2 of the 2022 Payment
Notice, 86 FR at 24201. For example, the 2019 and
2020 benefit year HHS–RADV Summary Report for
non-exiting issuers will be published in early
summer of 2022 and those issuers would be
expected to report those amounts in their 2021 MLR
Reports (filed by July 31, 2022).
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approved by HHS where such
adjustment has not been accounted for
in a prior MLR Reporting Form, in the
following reporting year. For example, if
an issuer’s successful administrative
appeal results in changes to HHS–RADV
adjustments for a state market risk pool
and issuers in that state market risk pool
are notified of those modifications in
September, those issuers would be
required to report these adjusted
amounts in the next MLR reporting
cycle, after the appeal has been resolved
and they receive notice of the adjusted
amounts. However, if an appeal is
resolved and issuers are notified about
modifications to HHS–RADV
adjustments for a given benefit year as
a result of that appeal before August 15,
or the next applicable business day,
those issuers must report the adjusted
amounts in the current MLR reporting
year.
Recognizing that flexibility is often
needed in reporting these amounts on
MLR forms, consistent with existing
framework in § 153.710(h)(3), HHS
would have the ability to modify these
instructions in guidance in cases where
HHS reasonably determines that these
reporting instructions would lead to
unfair or misleading financial reporting.
Our intent in issuing any such guidance
would be to avoid having the
application of the instructions in
exceptional circumstances lead to unfair
or misleading financial reporting.233
Finally, we propose a technical
amendment to § 153.710(h)(3) to replace
the current cross-reference to paragraph
(g)(1) and (2) of this section with a
reference to paragraph (h)(1) and (2) of
this section to point to the correct
sections that contain the relevant
reporting instructions. We inadvertently
omitted this update as part of the
amendments in the 2022 Payment
Notice to incorporate an EDGE
materiality threshold as part of
§ 153.710 that redesignated the risk
corridors and MLR reporting
instructions provisions from paragraph
(g) to paragraph (h).234
We seek comments on these
proposals.
11. Deadline for Submission of Data
(§ 153.730)
A risk adjustment covered plan must
submit data to HHS in states where HHS
is operating the risk adjustment program
that is necessary for HHS to calculate
233 See, for example, Treatment of Risk Corridors
Recovery Payments in the Medical Loss Ratio and
Rebate Calculations (December 30, 2020), available
at https://www.cms.gov/files/document/mlrguidance-rc-recoveries-and-mlr-final.pdf.
234 See 85 FR at 78604–78605 and 86 FR at
24194–24195.
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risk adjustment payments and
charges.235 236 In the 2014 Payment
Notice, HHS established that the
deadline for issuers to submit the
required risk adjustment data is April 30
of the year following the applicable
benefit year.237 For example, the
deadline for issuers of risk adjustment
covered plans to submit the required
2020 benefit year risk adjustment data
was April 30, 2021. HHS explained that
this deadline provides ample time to
allow for claims run-out from the prior
benefit year to ensure that diagnoses for
the benefit year are captured, while also
providing HHS sufficient time to
calculate payments and charges and
meet the June 30 deadline for notifying
issuers of risk adjustment transfer
amounts at § 153.310(e).238
We are not proposing to change this
deadline but propose to amend
§ 153.730 to address situations when
April 30 does not fall on a business day.
Currently, when April 30 falls on a nonbusiness day, HHS has exercised
enforcement discretion to extend the
deadline to the next applicable business
day.239 This occurred in the past for the
2016 and 2017 benefit year data
submissions and will occur again for the
2022 benefit year data submissions.
Recognizing there will be future benefit
years when April 30 does not fall on a
business day, HHS proposes to amend
§ 153.730 to provide that when April 30
of the year following the applicable
benefit year falls on a non-business day,
the deadline for issuers to submit the
required risk adjustment data would be
the next applicable business day. We
solicit comments on this proposal.
235 See 45 CFR 153.610 and 153.710. Since the
2017 benefit year, HHS has operated the risk
adjustment program in all 50 states and the District
of Columbia.
236 Issuers of reinsurance-eligible plans in states
where HHS operated the reinsurance program were
similarly required to submit the data necessary for
HHS to calculate reinsurance payments. See, for
example, 45 CFR 153.420 and 153.710. The
reinsurance program under section 1341 of the ACA
was a temporary program that applied to the 2014–
2016 benefit years. The risk adjustment program
under section 1343 of the ACA is a permanent
program and therefore is the primary focus of this
discussion.
237 See 78 FR 15410 at 15434.
238 Ibid.
239 See 81 FR 12204 at 12234 n.20; see also
Evaluation of EDGE Data Submissions for 2016
Benefit Year at 1 (Dec. 23, 2016), available at
https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/EDGE-2016-Q_QGuidance_20161222v1.pdf.
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D. Part 155—Exchange Establishment
Standards and Other Related Standards
Under the Affordable Care Act
1. Non-Interference With Federal Law
and Non-Discrimination Standards
(§ 155.120(c))
We propose to amend 45 CFR
155.120(c) such that its
nondiscrimination protections would
explicitly prohibit discrimination based
on sexual orientation and gender
identity. HHS previously codified such
nondiscrimination protections at
§ 155.120(c), but amendments made in
2020 to § 155.120(c) removed any
reference to sexual orientation and
gender identity. If finalized, this
proposal would revert § 155.120(c) to
the pre-2020 nondiscrimination
protections.
Section 155.120(c) currently provides
that in order to avoid interference and
comply with applicable nondiscrimination statutes, the states and
the Exchanges must not discriminate
based on race, color, national origin,
disability, age, or sex. Previously, in the
final rule ‘‘Patient Protection and
Affordable Care Act; Establishment of
Exchanges and Qualified Health Plans;
Exchange Standards for Employers’’
(Exchange Standards final rule),
pursuant to the authority provided in
section 1321(a)(1)(A) of the ACA to
regulate the establishment and
operation of an Exchange, we finalized
§ 155.120(c) to also prohibit
discrimination based on sexual
orientation and gender identity.240
However, in the 2020 final rule related
to section 1557 of the ACA, HHS revised
certain CMS regulations, including
those at § 155.120(c), by removing
sexual orientation and gender identity
as bases of discrimination subject to the
CMS regulations’ nondiscrimination
protections.241
CMS possesses statutory authority
independent of section 1557 of the ACA
to prohibit discrimination in Exchanges
pursuant to the authority to establish
requirements with respect to the
operation of Exchanges in section
1321(a)(1)(A) of the ACA.242 Pursuant to
this authority, HHS finalized in the
Exchange Standards final rule that a
State must comply with any applicable
non-discrimination statutes, specifically
finalizing that a State must not operate
an Exchange in such a way as to
discriminate on the basis of race, color,
national origin, disability, age, sex,
240 77
FR 18310 (March 27, 2012).
FR 37160 (June 19, 2020). See also id. at
37218–21 (the 2020 section 1557 final rule revised
the following CMS regulations: 45 CFR 147.104,
155.120, 155.220, 156.200, and 156.1230).
242 85 FR 37218–21 (June 19, 2020).
241 85
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gender identity, or sexual orientation.
CMS proposes to exercise that same
authority here to amend § 155.120(c) to
again prohibit states and Exchanges
carrying out Exchange requirements
from discriminating based on sexual
orientation and gender identity. Section
1321(a)(1)(A) of the ACA is the same
authority CMS relies upon for
implementation of existing
nondiscrimination protections at
§ 155.120(c). Utilizing this same
authority to again prohibit
discrimination based on sexual
orientation and gender identity at
§ 155.120(c) would be consistent with
the authority CMS relies upon for the
existing protections at § 155.120(c) that
currently prohibit discrimination on the
basis of race, color, national origin,
disability, age, or sex. We believe such
amendments are warranted in light of
the existing trends in health care
discrimination and are necessary to
better address barriers to health equity
for LGBTQI+ individuals.
A more in-depth discussion of these
developments and other factors
considered in proposing these
amendments to CMS nondiscrimination
protections is included earlier in the
preamble to § 147.104 under section
III.B.1.b. of this preamble. For brevity,
we refer back to § 147.104 under section
III.B.1.b. of the preamble rather than
restating the issues here.
We seek comment on this proposal.
3. Civil Money Penalties for Violations
of Applicable Exchange Standards by
Consumer Assistance Entities in
Federally-Facilitated Exchanges
(§ 155.206)
We propose to make a technical
correction to 45 CFR 155.206(i) to add
language that would cross-reference to
the authority to implement annual
inflation-related increases to civil
money penalties (CMPs) pursuant to the
Federal Civil Penalties Inflation
Adjustment Act Improvements Act of
2015 (2015 Act).243 Because of an
oversight, this language was not added
to § 155.206(i) as part of prior efforts
and rulemaking to implement the 2015
Act.244 Additionally, a reference to
§ 155.206 and any accompanying CMP
amounts have not been included in
HHS’s annual inflation update
243 Sec. 701 of the Bipartisan Budget Act of 2015,
Public Law 114–74, which amended the Federal
Civil Penalties Inflation Adjustment Act of 1990,
Public Law 101–410, 104 Stat. 890 (1990).
244 See, e.g., Department of Health and Human
Services; Adjustment of Civil Monetary Penalties
for Inflation; Interim Final Rule, 81 FR 61538 (Sept.
6, 2016), available at https://www.govinfo.gov/
content/pkg/FR-2016-09-06/pdf/2016-18680.pdf.
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rulemakings.245 Therefore, in this rule,
we propose to amend § 155.206(i) to add
the phrase ‘‘as adjusted annually under
45 CFR part 102’’ after the phrase ‘‘$100
for each day’’ in order to correct this
oversight. The associated CMP table in
45 CFR 102.3 is updated annually, and
§ 155.206(i) will be included in the next
annual update. To date, no CMPs have
been imposed under this authority, but
any that are will reflect the current
inflationary adjusted amount as
required by the 2015 Act and will be
calculated in accordance with
applicable OMB guidance to all
Executive Departments on the
implementation of the 2015 Act.
4. Ability of States To Permit Agents
and Brokers and Web-Brokers To Assist
Qualified Individuals, Qualified
Employers, or Qualified Employees
Enrolling in QHPs (§ 155.220)
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a. Required QHP Comparative
Information on Web-Broker Websites
and Related Disclaimer
We propose to amend
§ 155.220(c)(3)(i)(A) to include at
proposed new §§ 155.220(c)(3)(i)(A)(1)
through (c)(3)(i)(A)(5) a list of the QHP
comparative information web-broker
non-Exchange websites are required to
display consistent with § 155.205(b)(1).
We also propose to revise the disclaimer
requirement in § 155.220(c)(3)(i)(A) so
that web-broker non-Exchange websites
would be required to prominently
display a standardized disclaimer
provided by HHS stating that
enrollment support is available on the
Exchange website and provide a web
link to the Exchange website where
enrollment support for a QHP is not
available using the web-broker’s nonExchange website.
Currently, § 155.220(c)(3)(i)(A)
requires that a web-broker nonExchange website must disclose and
display all QHP information provided
by the Exchange or directly by QHP
issuers consistent with the requirements
of § 155.205(b)(1) and (c). To the extent
that not all information required under
§ 155.205(b)(1) is displayed on the webbroker’s website for a QHP, the webbroker’s website must prominently
display a standardized disclaimer
provided by HHS stating that
245 See, e.g., the Department of Health and Human
Services; Annual Civil Monetary Penalties Inflation
Adjustment; Final Rule, 85 FR 2869 (Jan. 17, 2020),
available at https://www.govinfo.gov/content/pkg/
FR-2020-01-17/pdf/2020-00738.pdf. See also the
Department of Health and Human Services;
Adjustment of Civil Monetary Penalties for Inflation
and the Annual Civil Monetary Penalties Inflation
Adjustment for 2021, 86 FR 62928 (Nov. 15, 2021),
available at https://www.govinfo.gov/content/pkg/
FR-2021-11-15/pdf/2021-24672.pdf and 45 CFR
102.3.
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information required under
§ 155.205(b)(1) for the QHP is available
on the Exchange website, and provide a
link to the Exchange website. The
preamble in the proposed 246 and
final 247 rules that established the
current text in § 155.220(c)(3)(i)(A)
explained the intent of this requirement
was that a web-broker website must
display all information required under
§ 155.205(b)(1) unless the information
was not available to the web-broker, in
which case the web-broker website must
display the standardized disclaimer.
Section 155.220(c)(3)(i)(D) similarly
requires web-brokers to display all QHP
data provided by an Exchange on its
non-Exchange website used to
participate in the FFE direct enrollment
(DE) program (whether Classic DE or
enhanced direct enrollment (EDE)).
In the early years of Exchange
operations, we released a data file with
limited QHP details (the QHP limited
file) that provided web-brokers with a
basic set of QHP information that could
be used to satisfy the display
requirements. Display of the data
elements from the QHP limited file, in
combination with a standardized
disclaimer (the plan detail disclaimer),
became the de facto minimum required
to satisfy the web-broker’s obligation to
display QHP information on its nonExchange website. In adopting this
approach, we recognized that the
Exchange may not have been able to
provide web-brokers with certain data
elements necessary to meet the
§ 155.205(b)(1) requirements, such as
premium information, due to
confidentiality requirements, webbroker appointments with QHP issuers,
and state law. We also recognized some
of the data elements, such as quality
rating information, were not going to be
available in the initial years of the
Exchanges’ operation.248
In the proposed 2022 Payment Notice,
we proposed to establish an exception
to the web-broker display requirements
captured at paragraphs (c)(3)(i)(A) and
(D).249 We proposed to revise paragraph
(c)(3)(i)(A) to require a web-broker nonExchange website to disclose and
display all QHP information provided
by the Exchange or directly by QHP
issuers consistent with the requirements
246 See
78 FR at 37046.
78 FR at 54077.
248 See Patient Protection and Affordable Care
Act; Program Integrity: Exchange, SHOP, and
Eligibility Appeals; Final Rule, 78 FR 54069 at
54077 (August 30, 2013).
249 See Patient Protection and Affordable Care
Act; HHS Notice of Benefit and Payment Parameters
for 2022 and Pharmacy Benefit Manager Standards;
Updates to State Innovation Waiver (Section 1332
Waiver) Implementing Regulations; Proposed Rule,
85 FR 78572 at 78614 (December 4, 2020).
247 See
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641
of § 155.205(b)(1) and (c), except when
a web-broker’s website does not support
enrollment in a QHP. We proposed a
similar revision to § 155.220(c)(3)(i)(D).
A web-broker’s non-Exchange website
may not support enrollment in a QHP if
the web-broker does not have an
appointment with a QHP issuer and
therefore is not permitted under state
law to enroll consumers in the coverage
offered by that QHP issuer. In such
circumstances, we proposed that the
web-broker’s non-Exchange website
would not be required to provide all the
information identified under
§ 155.205(b)(1). Instead, we proposed to
require web-brokers to display the
following limited, minimum
information for such QHPs: Issuer
marketing name, plan marketing name,
product network type, metal level, and
premium and cost-sharing information.
To take advantage of this proposed
flexibility, we also proposed that webbroker non-Exchange websites would be
required to identify to consumers the
QHPs, if any, for which the web-broker
websites did not facilitate enrollment by
prominently displaying the plan detail
disclaimer provided by the Exchange.
The plan detail disclaimer explains that
the consumer can get more information
about such QHPs on the Exchange
website, and includes a link to the
Exchange website. We noted that we
believed this proposal struck an
appropriate balance by recognizing that
web-brokers may not be permitted to
assist with enrollments in QHPs for
which they do not have an appointment
while still providing key information
about all QHPs on web-broker nonExchange websites to allow consumers
to window shop and identify whether
they may want to explore other QHP
options. We noted that it also would
minimize burdens for web-brokers by
not requiring them to develop processes
to display all of the required
comparative information listed in
§ 155.205(b)(1) for those QHPs for which
they do not have an appointment to sell.
We invited comments on the proposed
limited, minimum QHP details that
would be required to be displayed for
those QHPs that the web-broker does
not facilitate enrollment in through its
non-Exchange website. We sought
comment on whether to require display
of any additional elements identified
under § 155.205(b)(1) among the
limited, minimum information, such as
summaries of benefits and coverage.250
250 45 CFR 155.205(b)(1) references the following
comparative QHP information: Premium and costsharing information, the summary of benefits and
coverage, metal level, results of enrollee satisfaction
surveys, quality ratings, medical loss ratio
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Almost all public comments received
in response to the proposal in the
proposed 2022 Payment Notice
advocated for requiring that web-broker
non-Exchange websites display more
QHP information than the rule proposed
to require, even in cases in which the
web-broker non-Exchange website does
not support enrollment in a QHP. The
vast majority of commenters either
advocated for requiring web-broker nonExchange websites to display all
available QHP information for all
available QHPs, or generally supported
making it easier for consumers to obtain
comparative information for all
available QHPs when consumers are
using web-broker non-Exchange
websites. After consideration of the
comments received, we did not finalize
the proposed amendments to
§ 155.220(c)(3)(i)(A) and (c)(3)(i)(D). We
agreed that the display of more QHP
information on web-broker nonExchange websites is in the best interest
of consumers to aid them in comparing
QHP options without having to
potentially navigate to multiple
websites, consistent with the views of a
majority of commenters who advocated
for requiring that web-broker nonExchange websites display all of the
comparative information listed in
§ 155.205(b)(1). We also noted our belief
that requiring web-broker non-Exchange
websites to display additional QHP
information is reasonable given that
QHP information has been more readily
accessible for some time, both through
public use files and the Marketplace
API.
As a result, we communicated in the
preamble of part 2 of the 2022 Payment
Notice final rule our intent, pending
future rulemaking when these issues
could be further clarified, to limit our
current use of enforcement discretion
that permits web-brokers to only display
issuer marketing name, plan marketing
name, product network type, and metal
level for all available QHPs, beginning
with the PY 2022 open enrollment
period.251 We stated that web-broker
non-Exchange websites would be
required to display all QHP information
consistent with § 155.205(b)(1) and (c),
with the exception of MLR information
and transparency of coverage measures
under § 155.205(b)(1)(vi) and (vii), for
all available QHPs, beginning with the
PY 2022 open enrollment period. We
indicated we would not deem a webbroker non-Exchange website out of
information, transparency of coverage measures,
and the provider directory.
251 See Patient Protection and Affordable Care
Act; HHS Notice of Benefit and Payment Parameters
for 2022 and Pharmacy Benefit Manager Standards;
Final Rule, 86 FR 24140 at 24206 (May 5, 2021).
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compliance with § 155.220(c)(3)(i)(A)
and (D) with respect to the display of
MLR information and transparency of
coverage measures if the web-broker
non-Exchange website displays the
other required standardized
comparative information consistent
with § 155.205(b)(1) and (c). We also
explained that prior to the start of the
open enrollment period for PY 2022, if
a web-broker’s non-Exchange website
did not display all QHP information
consistent with the requirements of
§ 155.205(b)(1) and (c), other than MLR
information and transparency of
coverage measures, it would be required
to prominently display the plan detail
disclaimer and provide a link to the
Exchange website. We noted that this
interim approach did not establish new
requirements and instead represented a
change in the exercise of enforcement
discretion regarding the standardized
comparative information web-brokers
are required to display under existing
regulations following our consideration
of comments on the proposed changes
to the web-broker QHP display
requirements in the proposed 2022
Payment Notice.
We now propose to revise
§ 155.220(c)(3)(i)(A) to incorporate a
general requirement that web-broker
non-Exchange websites display the QHP
comparative information from
§ 155.205(b)(1), consistent with our
forecast in the preamble of part 2 of the
2022 Payment Notice final rule.252
Specifically, we propose to codify new
§§ 155.220(c)(3)(i)(A)(1) through (5) to
require web-broker websites to display
premium and cost-sharing information,
the summary of benefits and coverage
established under section 2715 of the
PHS Act; identification of the metal
level of the QHP as defined by section
1302(d) of the ACA or whether it is a
catastrophic plan as defined by section
1302(e) of the ACA; the results of the
enrollee satisfaction survey as described
in section 1311(c)(4) of the ACA; quality
ratings assigned in accordance with
section 1311(c)(3) of the ACA; and the
provider directory made available to the
Exchange in accordance with § 156.230
as the minimum QHP comparative
information web-broker non-Exchange
websites must display for all available
QHPs. Including this information within
§ 155.220, instead of through a crossreference to § 155.205(b)(1), would
provide better clarity and ease of
reference and establish a list of required
QHP comparative information
consistent with our current enforcement
approach, which, as discussed above,
does not require the display of MLR
252 Ibid.
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information and transparency of
coverage measures.
In addition, we propose to modify the
language in § 155.220(c)(3)(i)(A) that
served as the basis for the plan detail
disclaimer requirement to instead
require web-broker non-Exchange
websites that do not support enrollment
in all available QHPs to provide notice
to consumers of that fact, and direct
consumers to the Exchange website
where they may obtain enrollment
support. We propose to revise
§ 155.220(c)(3)(i)(A) to state that webbroker websites must disclose and
display the following QHP information
provided by the Exchange or directly by
QHP issuers consistent with the
requirements of § 155.205(c), and to the
extent that enrollment support for a
QHP is not available using the webbroker’s website, prominently display a
standardized disclaimer provided by
HHS stating that enrollment support for
the QHP is available on the Exchange
website, and provide a web link to the
Exchange website. Historically the plan
detail disclaimer served as the
mechanism and visual cue to convey to
consumers where they may find
additional information about particular
QHPs and how they may enroll in those
QHPs (that is, using HealthCare.gov).
However, requiring the continued
display of the plan detail disclaimer is
unnecessary and would be confusing as
the plan detail disclaimer states more
information about QHPs is available on
HealthCare.gov when in fact web-broker
non-Exchange websites will be
displaying the same QHP comparative
information as HealthCare.gov.253 In the
absence of the plan detail disclaimer,
the secondary function of conveying
those QHPs for which enrollment
support is not available through the
web-broker’s non-Exchange website and
how consumers may obtain enrollment
support is lost. This proposal to modify
the disclaimer requirement in
§ 155.220(c)(3)(i)(A) to convey to
consumers those QHPs for which a webbroker website does not provide
enrollment support and to direct them
to where they can obtain enrollment
support would serve the function lost by
253 The Plan Detail Disclaimer states: ‘‘[Name of
Company] isn’t able to display all required plan
information about this Qualified Health Plan at this
time. To get more information about this Qualified
Health Plan, visit the Health Insurance
Marketplace® website at HealthCare.gov.’’ See p.53
Federally-Facilitated Exchanges (FFEs) and
Federally-Facilitated Small Business Health
Options Program (FF–SHOP) Enrollment Manual,
section 5.3.2, August 18, 2021, available at https://
www.regtap.info/uploads/library/ENR_
FFEFFSHOPEnrollmentManual2020_5CR_
090220.pdf https://www.cms.gov/files/document/
ffeffshop-enrollment-manual-2021.pdf.
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the elimination of the plan detail
disclaimer requirement.
We seek comment on these proposals.
b. Prohibition of QHP Advertising on
Web-Broker Websites
Section 155.220(c)(3)(i)(L) prohibits
web-broker non-Exchange websites from
displaying QHP recommendations based
on compensation an agent, broker, or
web-broker receives from QHP issuers.
We propose to amend
§ 155.220(c)(3)(i)(L) to make clear that
web-broker non-Exchange websites are
also prohibited from displaying QHP
advertisements, or otherwise providing
favored or preferred placement in the
display of QHPs, based on
compensation agents, brokers, or webbrokers receive from QHP issuers. We
have observed a web-broker marketing
to QHP issuers on its website the option
for their QHPs to receive ‘‘preferred
placement’’ on the web-broker website
for a fee. The marketing materials
indicated preferred placement on the
web-broker’s website would position
selected QHPs at the forefront of the
user experience on the website. The
marketing materials also suggested that
users would not be made aware that
preferred plan placements were
purchased for a fee, and such
placements were not assigned based on
the specific attributes of the plans in
relation to other available plans for
which issuers did not purchase
preferred placement.
We believe QHP advertising on webbroker websites, whether or not
characterized as such or using other
terms such as ‘‘preferred placement,’’ is
not in the best interest of consumers.
QHP advertisements on web-broker
websites could be perceived by
consumers, and agents and brokers
assisting consumers, as permissible
QHP recommendations by the webbroker based on the best interests of the
consumer rather than on the basis of
payment from the QHP issuer to the
web-broker. Consumers, and agents and
brokers assisting consumers, may also
inadvertently perceive advertisements
placing a QHP in a favored position on
a web-broker’s website as the result of
a neutrally applied filter of all available
QHPs. These risks are substantially
increased if the advertisements are not
clearly identified as advertisements.
However, even if QHP advertisements
are clearly identified, we believe it is
not in the interest of consumers to allow
them on web-broker websites. In light of
the many different approaches to
advertising that exist now or may be
adopted in the future, we do not believe
that attempting to identify which
advertising practices are permissible
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and which are not is practical or
sufficiently protective of consumers’
interests. Advertising is intended to bias
consumer, agent, or broker perceptions
in a way that benefits the advertiser,
rather than the consumer or client. QHP
advertisements on web-broker websites
could take forms other than favored or
preferred placement among a list of
other QHPs (for example, obscuring the
availability of other QHPs), including
forms that could be more confusing or
deceptive to consumers, in particular
those consumers who may have limited
familiarity with health insurance
products and terminology and may be
easily misled by advertising claims.
Although § 155.220(c)(3)(i)(L)
prohibits web-broker websites from
displaying QHP recommendations based
on compensation an agent, broker, or
web-broker receives from QHP issuers,
it does not explicitly prohibit QHP
advertising, or otherwise providing
favored or preferred placement in the
display of QHPs, based on
compensation an agent, broker, or webbroker receives from QHP issuers.
Therefore, we propose to amend
§ 155.220(c)(3)(i)(L) to make clear that
when a web-broker website is used to
complete the QHP selection, the website
must not display QHP advertisements or
recommendations, or otherwise provide
favored or preferred placement in the
display of QHPs, based on
compensation the agent, broker, or webbroker receives from QHP issuers. For
purposes of this proposal, we intend for
advertisements to include any form of
marketing or promotion of QHPs based
on compensation from QHP issuers, as
opposed to the application of a neutral
filter or sorting methodology that may
promote particular QHPs and that are
not based on compensation an agent,
broker, or web-broker receives from
QHP issuers.
We seek comment on this proposal.
c. Explanation of Rationale for QHP
Recommendations on Web-Broker
Websites
We propose to amend § 155.220 to
add a proposed new paragraph
(c)(3)(i)(M) that would require webbroker websites to prominently display
a clear explanation of the rationale for
explicit QHP recommendations and the
methodology for the default display of
QHPs on their websites (for example,
alphabetically based on plan name, from
lowest to highest premium, etc.). We
believe this proposed new requirement
would provide consumers with a better
understanding of the information being
presented to them on web-broker
websites, thereby enabling them to make
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643
better informed decisions and shop for
and select QHPs that best fit their needs.
Web-broker websites typically begin
their consumer experiences with a
series of screening questions. Often
these screening questions are intended
to assist consumers with determining
whether they may qualify for insurance
affordability programs (for example,
APTC or Medicaid). Sometimes the
screening questions request additional
information unrelated to potential
eligibility for insurance affordability
programs, such as asking about
preferred providers, prescription drug
needs, or expected need for health care
services in the coming year. Some webbrokers use the information collected in
response to the preliminary screening
questions to recommend one or more
QHPs to consumers, or to rank all
available QHPs from most to least
recommended. Web-broker websites
may recommend QHPs so long as they
do not do so based on compensation an
agent, broker, or web-broker receives
from QHP issuers, consistent with
§ 155.220(c)(3)(i)(L), as described above.
Current rules do not require web-broker
websites to include an explanation of
the rationale for QHP recommendations.
All web-broker websites must adopt a
default display of QHPs by virtue of
providing consumers a list of available
QHPs, and the default display implicitly
recommends those QHPs displayed at
the top of the list.254 In addition, many
web-broker websites offer filtering tools
that consumers may use to adjust the
default display of QHPs (for example,
reordering the QHPs from lowest to
highest deductible or limiting the
display to silver metal level QHPs). In
cases in which QHP display filtering
tools are available and prominently
displayed on a web-broker website, and
when the default application of a filter
produces the default ordering of QHPs
displayed, the methodology for the
default QHP display may be apparent.
However, in other cases, consumers may
not realize the implications of the
default display of QHPs or may find it
difficult to understand the methodology
underlying the default display. Current
rules do not require web-broker
websites to include an explanation of
the methodology used for their default
displays of QHPs.
We support web-broker websites’ use
of innovative decision-support tools for
consumers to help them shop for and
select QHPs that best fit their needs.
However, web-broker websites that
explicitly recommend or rank QHPs do
254 45 CFR 155.220(c)(3)(i)(B) requires web-broker
websites to provide consumers the ability to view
all QHPs offered through the Exchange.
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not always provide an explanation for
their recommendations or rankings.
Similarly, web-broker websites may not
include an explanation of the
methodology used for their default
displays of QHPs, and it may not
otherwise be apparent what
methodologies are used. The absence of
such explanations may cause some
consumers to misunderstand the bases
for the recommendations displayed to
them on web-broker websites (whether
explicit or implicit), or may prevent
them from assessing the value of the
recommendations (for example, whether
a recommendation is based on the
factors most important to them). In
addition, the lack of explanations for
QHP recommendations on web-broker
websites may obscure that the webbroker is recommending QHPs based on
compensation the web-broker receives
from QHP issuers in violation of
§ 155.220(c)(3)(i)(L). For these reasons,
we propose to amend § 155.220 to add
proposed new paragraph (c)(3)(i)(M)
that would require web-broker websites
to prominently display a clear
explanation of the rationale for QHP
recommendations and the methodology
for its default display of QHPs.
We seek comment on this proposal.
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d. Federally-Facilitated Exchange
Standards of Conduct (§ 155.220(j))
We propose to amend
§ 155.220(j)(2)(i) such that its
nondiscrimination protections would
explicitly prohibit discrimination based
on sexual orientation and gender
identity. HHS previously codified such
nondiscrimination protections at
§ 155.220(j), but amendments made in
2020 to § 155.220(j) removed any
reference to sexual orientation and
gender identity. If finalized, this
proposal would revert § 155.220(j) to the
pre-2020 nondiscrimination protections.
Section 155.220(j)(2)(i) describes that
an individual or entity described in
paragraph (j)(1) must provide consumers
with correct information, without
omission of material fact, regarding the
FFE, QHPs offered through the FFE, and
insurance affordability programs, and
refrain from marketing or conduct that
is misleading (including by having a
direct enrollment website that HHS
determines could mislead a consumer
into believing they are visiting
HealthCare.gov), coercive, or
discriminates based on race, color,
national origin, disability, age, or sex.
Previously, in the 2017 Payment Notice
final rule, we finalized § 155.220(j)(2)(i)
to also prohibit discrimination based on
sexual orientation and gender
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identity.255 However, in the 2020 final
rule related to section 1557 of the ACA,
HHS revised certain CMS regulations,
including § 155.220(j)(2)(i), by removing
sexual orientation and gender identity
as bases of discrimination subject to the
CMS regulations’ nondiscrimination
protections.256
CMS possesses statutory authority
independent of section 1557 of the ACA
to prohibit discrimination in the group
and individual market pursuant to the
Secretary’s authority to establish
procedures for States to permit agents
and brokers to enroll consumers in
QHPs through the FFEs, as described in
sections 1312(e) of the ACA,257 and the
authority to establish requirements with
respect to the operation of Exchanges,
the offering of QHPs through such
Exchanges, and other requirements as
the Secretary determines appropriate
under sections 1321(a)(1)(A), (B), and
(D) of the ACA. Pursuant to this
authority, in the 2017 Payment Notice
final rule, HHS finalized at § 155.220
standards of conduct for agents and
brokers that assist consumers to enroll
in coverage through the FFEs to protect
consumers and ensure the proper
administration of the FFEs, including
nondiscrimination standards at
§ 155.220(j)(2)(i) that prohibited agents,
brokers and web-brokers described in
paragraph (j)(1) from discriminating
based on sexual orientation and gender
identity. CMS further explained that
such standards of conduct were
necessary to protect against agent and
broker conduct that is harmful towards
consumers, or that prevents the efficient
operation of the FFEs. CMS proposes to
exercise that same authority here to
amend § 155.220(j)(2)(i) to again
prohibit an individual or entity
described in paragraph (j)(1) from
discriminating based on sexual
orientation and gender identity.
Sections 1312(e) and 1321(a)(1)(A), (B),
and (D) of the ACA are the same
authorities CMS relies upon for
implementation of existing
nondiscrimination protections at
§ 155.220(j)(2)(i). Utilizing these same
authorities to again prohibit
discrimination based on sexual
orientation and gender identity at
§ 155.220(j)(2)(i) would be consistent
with the authority CMS relies upon for
the existing protections at
§ 155.220(j)(2)(i) that currently prohibit
discrimination on the basis of race,
255 80
FR 12204 (March 8, 2016).
FR 37160 (June 19, 2020); See id. at 37218–
21 (the 2020 section 1557 final rule revised the
following CMS regulations: 45 CFR 147.104,
155.120, 155.220, 156.200, 156.1230).
257 85 FR 37218–21 (June 19, 2020).
256 85
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color, national origin, disability, age, or
sex. We believe such amendments are
warranted in light of the existing trends
in health care discrimination and are
necessary to better address barriers to
health equity for LGBTQI+ individuals.
A more in-depth discussion of these
developments and other factors
considered in proposing amendments to
CMS nondiscrimination protections is
included earlier in the preamble to
§ 147.104 under section III.B.1.b. of this
preamble. For brevity, we refer back to
§ 147.104 under section III.B.1.b. of the
preamble rather than restating the issues
here.
We seek comment on this proposal.
i. Providing Correct Information to the
FFEs
Section 155.220(j)(2) sets forth the
standards of conduct for agents, brokers,
or web-brokers that assist with or
facilitate enrollment of qualified
individuals, qualified employers, or
qualified employees in coverage in a
manner that constitutes enrollment
through an FFE or that assist
individuals in applying for APTC and
CSRs for QHPs sold through an FFE. As
explained in the 2017 Payment Notice
proposed rule, these standards are
designed to protect against agent,
broker, and web-broker conduct that is
harmful towards consumers or prevents
the efficient operation of the FFEs.258
Pursuant to § 155.220(j)(2)(ii), agents,
brokers, or web-brokers must provide
the FFEs with ‘‘correct information
under section 1411(b) of the Affordable
Care Act.’’ Section 1411(b) of the ACA
details the information required to be
provided by applicants to the Exchange
to determine eligibility for Exchange
coverage, APTC, CSRs, and individual
responsibility exemptions, including the
applicant’s name, address, and
information regarding household
income.259 Section 1411(h) of the ACA
provides for the imposition of civil
penalties if any person fails to provide
correct information under section
1411(b) to the Exchange. Consistent
with § 155.220(l), agents, brokers and
web-brokers that assist with or facilitate
enrollment of qualified individuals,
qualified employers, or qualified
employees in states with SBE–FPs must
comply with all applicable FFE
standards. This includes, but is not
limited to, compliance with the FFE
standards of conduct in § 155.220(j). We
propose to amend § 155.220(j)(2)(ii) to
add proposed new § 155.220(j)(2)(ii)(A)
through (D) to codify additional details
regarding the requirement that agents,
258 80
FR at 75526–75527.
see 45 CFR 155.285(a)(1)(i) and (ii).
259 Also
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brokers, and web-brokers provide
correct information to FFEs and SBE–
FPs. More specifically, we propose to
capture specific examples of what it
means to provide correct information to
the FFEs and SBE–FPs with respect to
the consumer’s email address, mailing
address, telephone number, and
household income projection based on
our experience operating the FFEs and
the Federal platform on which certain
State-based Exchanges rely.
HHS has frequently observed
applications submitted to the FFEs that
contain incorrect consumer information,
including applications that contain
incorrect email addresses, telephone
numbers, and mailing addresses. As
administrator of the FFEs, HHS also has
received applications that contain
incorrect consumer household income
projections that do not accurately reflect
future consumer household income.
These practices can harm consumers
and prevent the efficient operation of
the FFEs. Therefore, we propose to add
language to § 155.220(j)(2)(ii) to address
these common problems occurring on
Exchange applications and provide clear
standards intended to substantially
reduce the occurrence of those problems
to protect consumers and the efficient
operation of the Exchanges. We also
propose to amend § 155.220(j)(2)(ii) to
make clear that the proposed standards
of conduct related to agents, brokers,
and web-brokers providing the FFEs and
SBE–FPs with correct information that
are listed in proposed new
§ 155.220(j)(2)(ii)(A) through (D) are not
exhaustive, but are simply the areas
where HHS has thus far identified a
need for more direct and clear guidance.
First, we propose to add proposed
new § 155.220(j)(2)(ii)(A), which would
provide that an agent, broker, or webbroker may only enter an email address
on an application for Exchange coverage
or for APTC and CSRs for QHPs sold
through an FFE or SBE–FP that is
secure, not disposable, and belongs to
the consumer or the consumer’s
authorized representative designated in
compliance with § 155.227. We also
propose to clarify that email addresses
may only be entered on Exchange
applications with the consent of the
consumer or the consumer’s authorized
representative, and that properly
entered email addresses would be
required to adhere to the following
guidelines pursuant to proposed new
§ 155.220(j)(2)(ii)(A)(1) through (3): (1)
The consumer’s email addresses may
not have domains that remove email
from an inbox after a set period of time;
(2) the consumer’s email address must
be accessible by the consumer, or the
consumer’s authorized representative
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designated in compliance with
§ 155.227, and may not be accessible by
the agent, broker, or web-broker, and (3)
the consumer’s email addresses may not
have domains that belong to the agent,
broker, or web-broker or their business
or agency. These proposed standards
align with existing guidance provided to
agents, brokers, and web-brokers.260
HHS is proposing to codify these
standards because it has observed
numerous Exchange applications that
contain email addresses that are
disposable (where emails disappear
after a set number of days), unsecure
(where emails may be accessed without
a password), or temporary (where the
email address will cease to receive
messages after a set time). HHS’ concern
arises from the fact that it has observed
agents, brokers, and web-brokers
submitting unauthorized Exchange
applications on behalf of consumers
without their knowledge or consent that
contain these types of email addresses.
HHS recognizes that such email
addresses may be used by consumers to
avoid receiving spam emails to a main
inbox, but the use of these email
addresses on Exchange applications
defeats the purpose of entering an email
address and occurs at a higher rate on
applications assisted by agents, brokers,
and web-brokers, many of which are
unauthorized. Consumers who wish to
avoid receiving emails from the
Exchange and who are being assisted by
an agent, broker, or web-broker may
simply omit a contact email address
from their Exchange application.
The email address provided as part of
an Exchange application should provide
a secure place for a consumer to receive
vital information from the Exchange
about their application. Emails sent to
consumers through the Exchange often
contain important information. As such,
the consumer’s email address entered
on an Exchange application should be
secure and only accessible by the
consumer or the consumer’s authorized
representative designated in compliance
with § 155.227. Allowing the use of
email addresses that are disposable,
unsecure, or temporary may harm the
consumer by preventing the consumer
from receiving important information
from the Exchange regarding their
Exchange application. It also could
prevent the efficient operation of the
Exchange. We therefore propose in this
rule to clarify and codify that if an email
260 https://www.regtap.info/uploads/library/AB_
Slides_Compliance_052021_5CR_062221.pdf See
Compliance with Marketplace Requirements:
Reminders for Agents and Brokers, May 20, 2021,
available at https://www.regtap.info/uploads/
library/AB_Slides_Compliance_052021_5CR_
062221.pdf.
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address is included on the Exchange
application, it must be the consumer’s,
or that of the consumer’s authorized
representative designated in compliance
with § 155.227, to comply with the FFE
standard of conduct under
§ 155.220(j)(2)(ii) to provide correct
information to the Exchange.
Second, we propose to add proposed
new § 155.220(j)(2)(ii)(B), which would
provide that an agent, broker, or webbroker may only enter a telephone
number on an application for Exchange
coverage or an application for APTC and
CSRs for QHPs that belongs to the
consumer or their authorized
representative designated in compliance
with § 155.227. We also propose to
provide that telephone numbers entered
on Exchange applications may not be
the personal number or business
number of the agent, broker, or webbroker assisting with or facilitating
enrollment through an FFE or assisting
the consumer in applying for APTC and
CSRs for QHPs, or their business or
agency, unless the telephone number is
actually that of the consumer or their
authorized representative. These
proposed standards align with existing
guidance provided to agents, brokers,
and web-brokers.261
Similar to email addresses, a
telephone number belongs to the
consumer if they, or their authorized
representative, are accessible at the
number and have access to the number.
A telephone number provides a way for
the consumer or their authorized
representative to be contacted if there is
an issue or question with the Exchange
application. Allowing an agent, broker,
or web-broker to list their telephone
number or a telephone number
associated with their business or agency
in the place of the consumer’s telephone
number would not serve or benefit the
consumer, but may harm the consumer
by preventing the consumer from
receiving important information from
the Exchange regarding their Exchange
application. It also could prevent the
efficient operation of the Exchange. In
addition, unlike email addresses, a
telephone number is a required field
when creating and submitting an
Exchange application. We therefore
propose in this rule to clarify and codify
that the telephone number included on
the Exchange application must be the
consumer’s, or that of the consumer’s
authorized representative as designated
in compliance with § 155.227, to
comply with the FFE standard of
conduct under § 155.220(j)(2)(ii) to
provide correct information to the
Exchange.
261 Ibid.
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Third, we propose to add proposed
new § 155.220(j)(2)(ii)(C), which would
provide that an agent, broker, or webbroker may only enter a mailing address
on an application for Exchange coverage
or an application APTC and CSRs for
QHPs that belongs to, or is primarily
accessible by, the consumer or their
authorized representative designated in
compliance with § 155.227. Further, the
mailing address entered on the
Exchange application must not be for
the exclusive or convenient use of the
agent, broker, or web-broker, and must
be an actual residence or a secure
location where the consumer or their
authorized representative may receive
correspondence, such as a P.O. Box or
homeless shelter. These proposed
standards align with existing guidance
provided to agents, brokers, and webbrokers.262 We also propose to provide
that mailing addresses entered on
Exchange applications may not be that
of the agent, broker, or web-broker, or
their business or agency, unless it is the
rare situation where that address is the
actual residence of the consumer or
their authorized representative. HHS is
proposing this change because it has
observed numerous instances in which
agents, brokers, or web-brokers have
engaged in unauthorized enrollments of
consumers in Exchange coverage
without their knowledge or consent that
involve the use of the same common
mailing address on multiple Exchange
applications that are not the actual
residence of the consumer or their
authorized representative.
As with telephone numbers, Exchange
applications must provide a mailing
address where the consumer or their
authorized representative may be
reached. Application or plan
information may be sent to this mailing
address, which is why it is important
that the mailing address be the actual
residence or a secure location where the
consumer or their authorized
representative may receive
correspondence. Entering an incorrect
mailing address on a consumer’s
Exchange application would result in
situations where the consumer would
not receive this information. This would
harm consumers and prevent the
efficient operation of the Exchange. We
therefore propose in this rule to clarify
and codify that the mailing address
included on the Exchange application
must be the consumer’s, or the
consumer’s authorized representative as
designated in compliance with
§ 155.227, to comply with the FFE
standard of conduct under
263 Section 9661 of the American Rescue Plan Act
of 2021 makes individuals with household incomes
262 Ibid.
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§ 155.220(j)(2)(ii) to provide correct
information to the Exchange.
Fourth, to minimize consumer harm
stemming from the IRS reconciliation
process, as well as to protect Exchange
operations from inaccurate APTC and
CSR determinations, we propose to add
proposed new § 155.220(j)(2)(ii)(D),
which would provide that when
submitting household income
projections on applications submitted to
the Exchange to determine a tax filer’s
eligibility for APTC in accordance with
§ 155.305(f) or CSRs in accordance with
§ 155.305(g), an agent, broker, or webbroker may only enter a household
income projection for a consumer that
the consumer or the consumer’s
authorized representative designated in
compliance with § 155.227, has
authorized and confirmed is an accurate
estimate. We propose to require that
household income projections on
Exchange applications must be attested
to by the consumer or their authorized
representative, and clarify that the
agent, broker, or web-broker may answer
questions posed by the consumer or
their authorized representative related
to household income projection, such as
helping determine what qualifies as
household income.
HHS is proposing this change because
it has observed several instances in
which agents, brokers, and web-brokers
have provided inaccurate consumer
household income projections on
Exchange applications to obtain the
lowest monthly premium rate for QHP
coverage. This is problematic in
situations when consumers are enrolled
without their knowledge or consent
because if a consumer is enrolled in an
Exchange policy with a zero-dollar
monthly payment, the consumer may
not be aware they have been enrolled
because there would not be a monthly
bill. HHS has observed several instances
where consumers have gone months
without realizing they are enrolled in a
QHP with APTC, typically finding out
about the unauthorized enrollment
when the IRS contacts them regarding
money they owe due to not qualifying
for all or part of the APTC paid for this
coverage or when the IRS delays release
of a tax refund.
Pursuant to § 155.305(f), a tax filer is,
in general, not eligible for APTC unless
the Exchange determines that the tax
filer is expected to have household
income, as defined in 26 CFR 1.36B–
1(e), of greater than or equal to 100
percent but not more than 400 percent
of the FPL for the year for which
coverage is requested.263 It is crucial
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that consumers applying for a QHP or
applying for APTC and CSRs for QHPs
provide an estimate of their projected
household income that is as accurate as
possible for an Exchange to be able to
determine their eligibility for APTC.
Failure to provide correct information
on household income can harm
consumers by creating liability during
the reconciliation process or delaying
the issuance of a tax refund, as well as
prevent the efficient operation of the
Exchange. More specifically, although
eligible consumers may use APTC to
lower their monthly premiums for QHP
coverage through an Exchange if a
consumer’s projected household income
on his or her Exchange application
submission is inaccurate and lower than
the actual household income, the
consumer is likely to have excess APTC
(the extent to which APTC exceeds the
allowed PTC), all or a portion of which
must be repaid when the consumer files
his or her federal income tax return for
the year of coverage as required under
26 U.S.C. 36B(f) and 26 CFR 1.36B–4.
Each year, consumers for whom APTC
is paid must submit Form 8962 with
their annual federal income tax return to
the IRS. On Form 8962, the consumer
must reconcile the APTC paid on his or
her behalf with the PTC 264 the
consumer is allowed. Generally,
consumers whose projected household
annual income at enrollment is less than
the actual annual household income
will have excess APTC that must be
repaid, subject to a repayment limit for
consumers with household income
below 400 percent of the FPL.
Consumers are required to repay excess
APTC by increasing their tax liability for
the year by all or a portion of the excess
APTC. Good-faith income projections,
versus an income projection designed to
achieve the lowest monthly rate, better
protect the consumer from the
unexpected cost and burden of repaying
large amounts of APTC. Additionally,
per § 155.305(b), Exchange enrollees
must report changes that may impact
their eligibility for financial assistance
or coverage, including their projected
annual household income, within 30
days of the change.
CSRs are similarly tied to a
consumer’s household income and they
lower the amount that certain eligible
individuals have to pay for deductibles,
copayments, and coinsurance. Incorrect
projections of a consumer’s household
income would also lead to incorrect
CSR determinations, which would harm
above 400 percent of the FPL who meet all other
eligibility criteria eligible for APTC, but only
through PY 2022.
264 https://www.irs.gov/pub/irs-pdf/p974.pdf.
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QHP issuers and prevent the efficient
operation of the Exchange.
An estimate of a consumer’s
household income is required on the
Exchange application if the consumer is
applying for APTC and CSRs. As
outlined above, agents, brokers, or webbrokers who are intentionally or
negligently entering inaccurate
household income projections on a
consumer’s Exchange application can
harm consumers and prevent the
efficient operation of the Exchange. We
therefore propose in this rule to clarify
and codify that if household income
projections are included on the
Exchange application, the estimate must
be attested to by the consumer or the
consumer’s authorized representative as
designated in compliance with
§ 155.227 to comply with the FFE
standard of conduct under
§ 155.220(j)(2)(ii) to provide correct
information to the Exchange.
As noted previously in this rule, the
proposal to amend § 155.220(j)(2)(ii) to
add proposed new § 155.220(j)(2)(ii)(A)
through (D) is not intended to constitute
an exhaustive list of practices that
govern providing correct information to
the Exchange under § 155.220(j)(2)(ii);
rather, these are areas where HHS has
thus far identified a need for more direct
and clear guidance to protect consumers
and the efficient operation of the
Exchanges.
We seek comment on these proposals.
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ii. Prohibited Business Practices
We propose to amend § 155.220(j)(2)
to add several new standards of conduct
for agents, brokers, and web-brokers that
assist consumers with applying for and
enrolling in coverage through an FFE or
SBE–FP, with or without APTC and
CSRs. Similar to the standards first
established in the 2017 Payment Notice,
these additional standards are also
intended to protect against agent,
broker, and web-broker conduct that is
harmful towards consumers or frustrates
the efficient operation of the Exchange.
More specifically, we propose to codify
standards related to the use of scripting
and other automation interactions with
CMS Systems or the DE Pathways
(including both Classic DE and EDE),
identity proofing consumer accounts on
HealthCare.gov, and providing
assistance with SEP enrollments. HHS is
proposing these new FFE standards of
conduct for agents, brokers, and webbrokers assisting consumers in FFEs and
SBE–FPs because it has observed
practices in these areas that have caused
or can cause harm to consumers, as well
as impede the efficient operation of the
Exchange.
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iii. Prohibited Automated Interactions
With CMS Systems
In order to enroll qualified
individuals in a QHP in a manner that
constitutes enrollment through the
Exchange and assist individuals in
applying for APTC and CSRs for QHPs,
agents, brokers, and web-brokers must
comply with the regulatory
requirements contained in § 155.220,
including the requirement that such
agents, brokers, and web-brokers
comply with the terms of applicable
agreements between the agent, broker,
or web-broker and the Exchange.265 One
such agreement, the ‘‘Agent Broker
General Agreement for Individual
Market Federally-Facilitated Exchanges
and State-Based Exchanges on the
Federal platform (IM General
Agreement),’’ 266 sets forth requirements
related to automation. Specifically,
section IV(c)(i)(4) of the IM General
Agreement provides that scripting and
other automation of interactions with
CMS Systems or the DE Pathways are
strictly prohibited, unless approved in
advance by CMS. While these
requirements are addressed in the IM
General Agreement, they are not
currently explicitly set forth in
regulation. Therefore, we propose to
amend § 155.220(j)(2) to add proposed
new § 155.220(j)(2)(vi) to codify
requirements and limitations on the use
of automation and align the regulation
with the IM General Agreement. New
proposed § 155.220(j)(2)(vi) would
provide that an agent, broker, or webbroker that assists with or facilitates
enrollment of qualified individuals,
qualified employers, or qualified
employees, in coverage in a manner that
constitutes enrollment through an FFE
or SBE–FP, or assists individuals in
applying for APTC and CSRs for QHPs
sold through an FFE, or SBE–FP must
not engage in scripting and other
automation of interactions with CMS
Systems or DE Pathways, unless
approved in advance in writing by CMS.
CMS Systems to which CMSregistered agents, brokers, and webbroker may have access include
HealthCare.gov, and the CMS Enterprise
Portal. Codifying a regulation that
addresses the use of automation in
relation to these systems and platforms
would help to establish clear and
enforceable standards that would govern
the behavior of agents, brokers, and
web-brokers when assisting Exchange
applicants. It would also clarify CMS’
authority to take enforcement action
265 45
CFR 155.220(d).
266 https://www.hhs.gov/guidance/sites/default/
files/hhs-guidance-documents/ab_py2020_im_
general_agreement_final_1.pdf.
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647
against agents, brokers, and web-brokers
for violations of these requirements.
HHS is proposing this standard of
conduct because it has observed
instances where unauthorized
automated browser-based interactions
with Exchange systems have led to
unauthorized enrollments, unauthorized
application changes, or unauthorized
access to consumer PII. The risk of harm
to consumers and the efficient operation
of the Exchange is heightened when
automated interactions occur because
more consumer information can be
downloaded using automation than
through a manual process. Automated
browser-based interactions with
Exchange systems can lead to increases
in unauthorized enrollments,
unauthorized application changes, or
unauthorized access to consumer PII
because agents, brokers, and webbrokers could find far more consumer
information using automation, which
could result in the unauthorized taking,
use, or sale of significant amounts of
consumer PII for unlawful purposes.
Allowing automation would also create
significant traffic in the system, which
could result in increased risk of system
speed slowdowns and stability issues,
as these automated interactions would
cause a lot more system activity per user
than anticipated and planned for. We
seek comments on these concerns and
this proposal. While this proposed rule
is under consideration, CMS will
continue to take appropriate
enforcement action in response to
situations resulting from unauthorized
use of automation in connection with
CMS Systems.267
We note that certain web-broker
interactions with the Exchange were
created with the intention of being
automated, including the plan finder
Application Program Interface (API) and
Marketplace API. Thus, this proposal to
prohibit use of automation in other
circumstances is sufficiently narrowly
tailored to accommodate these limited
instances when automation is permitted
in connection with CMS Systems or DE
Pathways when approved in advance in
writing by CMS. CMS believes that
other uses of automation beyond what is
currently approved may have
appropriate business use cases. We
therefore seek comment on appropriate
uses of automation that may contribute
to the efficient operation of the FFEs
and SBE–FPs, and the DE Pathways.
iv. Identity Proofing
HealthCare.gov utilizes identity
proofing to verify the identity of a
consumer when a new Exchange
267 See
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account is created. We propose to
amend § 155.220(j)(2) to add proposed
new § 155.220(j)(2)(vii), which would
provide that when identity proofing
accounts on HealthCare.gov, agents,
brokers, or web-brokers must only use
an identity that belongs to the
consumer. Currently, identity proofing
is required when a consumer creates an
account on HealthCare.gov via an EDE
site, and when a consumer works with
an agent or broker in person.268 When
a consumer creates an account on
HealthCare.gov or an EDE site, they go
through a remote identity proofing
(RIDP) process. The RIDP process is an
Experian service that takes basic
demographic information regarding the
consumer and requires the consumer to
answer multiple choice questions
correctly to proceed. This is done to
ensure the consumer is a real person, to
protect the consumer’s personal
information, and to prevent someone
else from creating an Exchange account
and applying for Exchange coverage in
another’s name without their knowledge
or consent.
We are proposing this amendment to
§ 155.220(j)(2), as we have observed
situations in which agents have used the
same identity information to complete
the identity proofing process for
multiple consumer Exchange accounts,
which can harm to consumers and
prevent the efficient operation of the
Exchange, undermines the purpose of
identity proofing consumers and is often
associated with unauthorized
enrollments, identity theft, and fraud.
We seek comment on this proposal.
agents, brokers, and web-brokers
providing assistance with SEP
enrollments would be required to make
reasonable, good faith efforts to
ascertain the consumer’s eligibility for
the SEP, consistent with the existing
standard under § 155.220(j)(3). We
propose this requirement to address
circumstances HHS has observed under
which consumers who apply for QHP
enrollment through an SEP with the
assistance of an agent, broker, or web
broker are not made aware of the basis
upon which their QHP application
claims entitlement to an SEP, or who
otherwise did not authorize an agent,
broker, or web-broker to enroll them in
a QHP or make a change to their current
QHP enrollment.
The purpose of SEPs is to promote
access to health insurance coverage and
continuous coverage by allowing
individuals to enroll outside of the open
enrollment period only if they
experience certain SEP triggering
events; this helps to avoid and control
against adverse selection that would
destabilize the Exchanges. The purpose
of proposing to codify this requirement
in proposed new § 155.220(j)(2)(viii) is
to ensure the validity and integrity of
the SEP process, avoid Exchange
destabilization, and to create clear,
enforceable standards to help mitigate
consumer harm by establishing that
agents, brokers, and web-brokers are
responsible for providing information to
the FFE that is accurate to the best of
their knowledge, and to which the
consumer has attested.
We seek comment on these proposals.
v. Providing Information to FederallyFacilitated Exchanges in Connection
With Special Enrollment Periods
Finally, § 155.420(a)(1) provides that
the Exchange must provide SEPs during
which qualified individuals may enroll
in QHPs and enrollees may change
QHPs. We propose to amend
§ 155.220(j)(2) to add proposed new
§ 155.220(j)(2)(viii), which would state
that when providing information to
FFEs that may result in a determination
of eligibility for an SEP under § 155.420,
agents, brokers, and web-brokers must
obtain authorization from the consumer
to submit the request for a
determination of eligibility for a SEP
(although this authorization does not
need to be in writing) and make the
consumer aware of the specific
triggering event and SEP for which the
agent, broker, or web-broker will be
submitting an eligibility determination
request on the consumer’s behalf. Under
this new proposed standard of conduct,
5. Premium Calculation (§ 155.240(e))
HHS proposes to add language at
§ 155.240(e)(2) to apply the premium
calculation methodology currently
applicable in the FFEs and SBE–FPs to
all Exchanges, beginning with PY 2024.
This proposed amendment to
§ 155.240(e), along with the proposed
amendments to §§ 155.305(f)(5) and
155.340, support HHS’s proposal to
clarify that an Exchange is required to
prorate the calculation of premiums for
individual market policies and the
calculation of APTC in cases where an
enrollee is enrolled in a particular
policy for less than the full coverage
month, including when the enrollee is
enrolled in multiple policies within a
month, each lasting less than the full
coverage month. We further discuss
these proposed changes in the
Administration of Advance Payments of
the Premium Tax Credit and CostSharing Reductions (§ 155.340) section
of this proposed rule where we propose
to require all Exchanges to prorate
premium and APTC amounts in cases
268 Section
1411(g)(1) of the ACA.
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where an enrollee is enrolled in a
particular policy for less than the full
coverage month. We seek comment on
these proposals.
6. Eligibility Standards (§ 155.305)
We are proposing a technical
amendment to § 155.305(f)(1)(i) to
clarify that the income eligibility
standards used by the Exchange for
determining whether an individual is an
applicable taxpayer for purposes of
APTC eligibility are the same as the
income thresholds at IRS regulation 26
CFR 1.36B–2(b). Whereas the current
regulation states expected household
income must be ‘‘greater than or equal
to 100 percent but not more than 400
percent of the FPL for the benefit year
for which coverage is requested,’’ the
proposed amendment specifies the
individual must have an expected
household income which will qualify
the tax filer as an applicable taxpayer
according to 26 CFR 1.36B–2(b). In turn,
26 CFR 1.36B–2(b) outlines the FPL
percentage thresholds that are used for
determining PTC eligibility. In practice,
the federal and state Exchanges have
always relied on thresholds outlined in
26 CFR 1.36B–2(b) to determine APTC
eligibility, but we note that this
proposed change allows for greater
regulatory consistency and minimizes
the need to update § 155.305(f)(1)(i) in
response to legislative changes that may
alter FPL percentage thresholds, as
occurred for certain years under the
ARP.
7. Eligibility for Advance Payments of
the Premium Tax Credit (§ 155.305(f)(5))
HHS proposes to amend
§ 155.305(f)(5) to require that APTC
must be calculated in accordance with
26 CFR 1.36B–3 and would be subject
to the prorating methodology at
proposed § 155.340(i). This proposed
amendment to § 155.305(f)(5), along
with the proposed amendments at
§§ 155.240(e), and 155.340, detailed
elsewhere in this rule, support HHS’s
proposal to clarify that an Exchange is
required to prorate the calculation of
premiums for individual market policies
and the calculation of APTC in cases
where an enrollee is enrolled in a
particular policy for less than the full
coverage month, including when the
enrollee is enrolled in multiple policies
within a month, each lasting less than
the full coverage month. We further
discuss these proposals in the
Administration of Advance Payments of
the Premium Tax Credit and CostSharing Reductions (§ 155.340) section
of this proposed rule. We seek comment
on this proposal.
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8. Verification Process Related to
Eligibility for Insurance Affordability
Programs—Employer Sponsored Plan
Verification (§ 155.320)
Strengthening program integrity with
respect to subsidy payments in the
individual market continues to be a top
HHS priority. Accordingly, we propose
to revise § 155.320(d)(4) to provide each
Exchange with the flexibility to tailor its
employer sponsored plan verification
process based on its assessment of the
risk of inappropriate payments of APTC
and CSRs as a result of associated risk
and composition of their enrolled
population.
Currently, Exchanges must verify
whether an applicant for APTC and
CSRs is eligible for or enrolled in an
eligible employer sponsored plan for the
benefit year for which coverage is
requested using available data sources,
if applicable, as described in
§ 155.320(d)(2). For any coverage year
that an Exchange does not reasonably
expect to obtain sufficient verification
data as described in § 155.320(d)(2)(i)
through (iii), an alternate procedure
applies. Specifically, Exchanges must
select a random sample of applicants
and meet the requirements under
§ 155.320(d)(4). For benefit years 2016
through 2019, Exchanges also could use
an alternative process approved by
HHS.
In the 2021 Payment Notice final rule,
we finalized the policy that for PYs
2020 and 2021, HHS would not take
enforcement action against Exchanges
that do not perform random sampling as
required by § 155.320(d)(4), when the
Exchange does not reasonably expect to
obtain sufficient verification data as
described in § 155.320(d)(2)(i) through
(iii). This policy was designed to reduce
burden on Exchanges while HHS
finalized the results of a study to
determine the potential risk and risk
factors, if any, that may be associated
with applicants that choose to enroll in
an Exchange QHP with APTC/CSRs,
rather than coverage offered through
their employer. In the 2022 Payment
Notice Final Rule, we extended this
non-enforcement to PY 2022.
As we will discuss later in this
preamble, HHS reviewed the results of
the 2019 study and found that the risk
for inappropriate eligibility or payment
of APTC and CSRs based on applicant
eligibility for or enrollment in
qualifying employer sponsored coverage
was low. Therefore, we are now
proposing a new optional alternate
procedure to replace the current
procedures under § 155.320(d)(4). Under
this proposed option, an Exchange
would have flexibility to design its
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verification process based on the
Exchange’s assessment of risk for
inappropriate eligibility or payment for
APTC or CSRs. Until a new alternate
procedure becomes effective, Exchanges
must continue to use the procedures set
forth under § 155.320(d)(4)(i), subject to
the enforcement policy in effect for PYs
2021 and 2022.
HHS’ experience conducting random
sampling revealed that the burden
associated with the verification activity
far outweighed the activity’s value to
the integrity of the program. We found
that employer response rates to HHS’
requests for information were low. We
further found that the manual
verification process described in
§ 155.320(d)(4)(i) requires significant
resources and government funds, and
the value of the results ultimately did
not appear to outweigh the costs of
conducting the work because only a
small percentage of sampled enrollees
had been determined by HHS to have
received APTC or CSRs inappropriately.
Based on our experiences with the
random sampling methodology under
§ 155.320(d)(4)(i), HHS concluded that
the methodology may not be the best
approach for all Exchanges to assess the
risk for inappropriate payment of APTC/
CSRs associated with applicants who
may be eligible for or enrolled in
qualifying employer sponsored
coverage.
As a result, in 2019, HHS conducted
a study to: (1) Determine the unique
characteristics of the population with
offers of employer sponsored coverage
that meets minimum value and
affordability standards, (2) compare
premium and out-of-pocket costs for
consumers enrolled in affordable
employer sponsored coverage to
Exchange coverage, and (3) identify the
incentives, if any, that drive consumers
to enroll in Exchange coverage rather
than coverage offered through their
current employer. The results of this
study were finalized in early 2020 and
aligned with HHS’ previous findings
from past studies that there is likely a
very low volume of applicants with
offers of affordable coverage through
their employer that choose to
inappropriately enroll in an Exchange
QHP with APTC and CSRs.
Specifically, the study found that no
more than 2 percent of enrollees
received APTC/CSR inappropriately,
and that lower income individuals and
families had the most incentive to enroll
in an Exchange QHP with APTC/CSR
rather than coverage offered through an
employer. HHS is therefore of the view
that the risk for inappropriate payment
of APTC and CSRs is low; thus, we
propose to provide each Exchange with
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649
the flexibility to tailor its verification
process based on its assessment of the
risk of inappropriate payments of
APTC/CSRs as a result of associated risk
and composition of their enrolled
population. This includes the ability of
State Exchanges that operate their own
eligibility and enrollment platform and
have implemented, or are finalizing
their implementation of, the current
random sampling requirements under
§ 155.320(d)(4)(i), to continue
employing the random sampling process
and requirements and refining the
process, as needed, under the proposed
risk-based approach under
§ 155.320(d)(4)(i). HHS believes that
these changes will serve to protect the
integrity of the Exchange program by
allowing all Exchanges to proactively
identify risk factors attendant to QHP
enrollees’ receipt of APTC/CSRs for
which they may not be eligible.
Specifically, we propose to allow
Exchanges to implement a verification
method that utilizes an approach based
on a risk assessment identified through
analysis of an Exchange’s experience in
relation to APTC/CSRs payments. HHS
expects that this risk assessment would
be informed by and identified through
research and analysis of an Exchange’s
experiences with current and past
enrollments, and not solely based on
previously published research or
literature. Furthermore, there are certain
standards that HHS requires that all
Exchanges adhere to when designing a
risk-based approach to verify an
applicant’s offer of employer sponsored
coverage. As such, HHS requires that
any risk-based verification process be
reasonably designed to ensure the
accuracy of the data and is based on the
activities or methods used by an
Exchange such as studies, research, and
analysis of an Exchange’s own
enrollment data. For example, if an
Exchange’s experience is that applicants
from large companies that have different
classes of employees, who may or may
not qualify for employer sponsored
coverage due to the number of hours
they work per week, represent a higher
risk of improper APTC/CSR payments,
then the Exchange may implement a
risk-based verification process to
confirm whether applicants employed
by such companies appropriately
received APTC/CSRs.
Given that the proposed risk-based
approach to verify whether an applicant
has received an offer of coverage
through an employer or is enrolled in
employer sponsored coverage depends
largely on an Exchange’s assessment of
risk and unique populations, HHS
believes that there are various ways in
which a risk-based approach can be
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operationalized. Below we outline a few
scenarios to provide illustrative
examples of the procedures an Exchange
may follow.
The first scenario concerns Exchanges
that do not have access to an approved
trusted data source that provides
accurate and up-to-date information
regarding enrollment or pre-enrollment
in coverage offered through an employer
and have determined that manual
verification, such as conducting random
sampling of enrollees to determine if
any had an offer of affordable coverage
through their employer but chose to
enroll in an Exchange QHP with APTC/
CSR instead, requires significant
resources to conduct and have
determined that the risk for improper
APTC/CSR payment is low. In this
scenario, Exchanges may make a
reasonable determination and decide to
accept a consumer(s)’ attestation
without any further manual verification,
similar to current procedures to accept
attestation only for residency and
incarceration status. Conversely, if an
Exchange has determined a high risk for
improper APTC/CSR payment exists
within its enrolled population, but also
doesn’t have access to an approved
trusted data source for electronic
verification, an Exchange may make a
reasonable determination that
conducting manual verification as part
of its risk-based approach, such as
conducting random sampling, is the
appropriate risk-based approach to
conduct employer sponsored coverage
verification. Finally, there may be
Exchanges that have determined that
they do have access to an approved,
accurate, and up-to-date trusted data
source that allows for electronic
verification of offers of employer
sponsored coverage. In this scenario, an
Exchange may choose to conduct
electronic verification of their entire
population through that trusted data
source to verify offers of employer
sponsored coverage. HHS believes that
any of these approaches will serve to
satisfy the requirement to conduct
employer sponsored coverage
verification using a risk-based approach
while providing flexibility for all
Exchanges to determine the process that
best meets the needs of their
populations.
Because HHS found that the risk for
improper APTC payment is low in
Exchanges using the federal eligibility
and enrollment platform, such
Exchanges would leverage the current
attestation questions on the single,
streamlined application and accept
attestation without further verification
against other trusted data sources. The
attestation questions include, ‘‘Are any
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of these people currently enrolled in
health coverage?’’ and ‘‘Will any of
these people be offered health coverage
through their job, or through the job of
another person, like a spouse or
parent?’’. HHS would also accept
attestations related to employer
sponsored coverage because HHS
currently lacks access to another
approved data source to verify whether
an applicant has an offer of employer
sponsored coverage that is affordable
and meets minimum value standards. In
the 2019 study referenced earlier in the
preamble, HHS examined whether the
use of other data sources would be
feasible to verify offers and affordability
of employer sponsored coverage, such
as the National Directory of New Hires
(NDNH) database. HHS determined that
all available data sources were
insufficient and did not provide the
necessary information to satisfy the
requirement, or would require
legislative changes to give Exchanges
permission to access and use them for
verification of employer sponsored
coverage. CMS notes that additional
data source access, such as the NDNH,
would improve accuracy and reduce
administrative burden to consumers for
the income verification step during the
eligibility process.
Finally, under this proposal, we
clarify that since SBE–FPs use the
HealthCare.gov platform for eligibility
and enrollment determinations, SBE–
FPs would be required to follow the
approach outlined above consistent
with CMS regulations and the
agreements SBE–FPs sign with CMS.
Current Federal platform agreements
require that SBE–FPs adhere to the same
policy and operations as Exchanges that
use the federal eligibility and
enrollment platform regarding eligibility
for and enrollment in QHP coverage.
Furthermore, in accordance with
§ 155.120(c), an Exchange’s verification
program cannot be discriminatory in
nature, and State Exchange’s
verification processes will be monitored
by HHS in accordance with its authority
under §§ 155.1200 and 155.1210. In
designing their verification program,
Exchanges should pay special attention
to known risks, including risk pool
manipulation or steering high risk
employees from the group health market
into the Exchanges. The goal of this
proposed policy is to ensure that only
applicants eligible to receive APTC/
CSRs receive these subsidies, and we
would exercise our oversight authorities
to ensure an Exchange’s verification
policies are not used to prevent any
particular class of applicants from
enrolling in QHP coverage with APTC/
CSRs. We believe this approach would
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allow Exchanges to proactively identify
and target applicants who may, for
example, have an incentive to enroll in
Exchange coverage with APTC/CSRs
rather than their employer sponsored
plan that meets minimum value and
affordability standards. Further, we
believe that a risk-based approach for
verification of eligibility for employer
sponsored eligibility or coverage
verification would allow Exchanges to
identify a larger population of Exchange
enrollees who would be ineligible for
APTC/CSRs due to an offer of employer
sponsored coverage, as compared to the
random sampling method. We believe
the new policy we propose would more
effectively protect the integrity of
Exchange programs, as Exchanges
would be able to mitigate the risk of
improper federal payments in the form
of APTC during the year more
effectively.
Therefore, we propose to revise
§ 155.320(d)(4) by removing the
requirement that the Exchange select a
random sample of applicants for whom
the Exchange does not have data as
specified in § 155.320(d)(2)(i) through
(iii) effective upon the finalization of the
final rule. we encourage State
Exchanges to submit comments on the
proposed timing, especially if the
proposal causes operational challenges
or undue hardship as a result. We
propose adding new language at
§ 155.320(d)(4) under which an
Exchange would be permitted to design
its verification process for enrollment in
or eligibility for qualifying coverage in
an eligible employer sponsored plan
based on the Exchange’s assessment of
risk for inappropriate payment of APTC/
CSRs or eligibility for CSRs, as
appropriate. The proposed language at
§ 155.320(d)(4) would provide all
Exchanges with the flexibility to
determine the best means to design and
implement a process to verify an
applicant’s enrollment in or eligibility
for employer sponsored coverage,
through analyses of relevant Exchange
data, research, studies, and other means
appropriate and necessary to identify
risk factors for inappropriate payment of
APTC or eligibility for CSRs. As
previously discussed earlier in this rule,
Exchanges must continue to use the
procedures set forth in § 155.320(d)(4)(i)
until a new alternate procedure becomes
effective. We also propose to retain the
current requirement at
§ 155.320(d)(4)(i)(A) that the Exchange
provide notice to the applicant, but
amend it such that it is contingent on
whether the Exchange will be contacting
the employer of an applicant to verify
whether an applicant is enrolled in an
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eligible employer sponsored plan or is
eligible for qualifying coverage in an
eligible employer sponsored plan for the
benefit year for which coverage is
requested. Second, to provide more
flexibility for Exchanges, we propose no
longer applying the requirement at
§ 155.320(d)(4)(i)(D), which requires the
Exchange to make reasonable attempts
to contact an employer listed on an
applicant’s Exchange application to
verify whether an applicant is enrolled
in an employer sponsored plan or is
eligible for qualifying coverage in an
eligible employer sponsored plan.
As we explained above, HHS’
experience has been that employer
compliance with these notices was low,
which led to the proposal to remove the
random sampling requirement.
However, Exchanges may continue to
send notification to employers as part of
their risk-based verification processes if
they so choose. Third, we propose
removing the requirement at
§ 155.320(d)(4)(i)(F), which states that
after 90 days from the date on which the
Exchange first provides notice to an
applicant as described in
§ 155.320(d)(4)(i)(A), the Exchange must
redetermine eligibility for APTC and
CSRs if the Exchange is unable to obtain
the necessary information from an
applicant’s employer regarding
enrollment in or eligibility for
qualifying coverage in an employer
sponsored plan. We believe these
proposed changes provide Exchanges
with the flexibility to implement a
verification process for enrollment in or
eligibility for an employer sponsored
plan that is tailored to risks observed in
their respective populations. As
previously discussed earlier in
preamble, Exchanges must continue to
use the procedures set forth in
§ 155.320(d)(4)(i) until a new alternate
procedure becomes effective.
Finally, we propose to remove the
option for Exchanges to follow the
procedures outlined in
§ 155.320(d)(4)(ii) to develop an
alternative verification process that is
approved by HHS. The revisions to
§ 155.320(d)(4)(i) provide enough
flexibility for Exchanges to develop a
risk-based verification process for
eligibility for or enrollment in employer
sponsored coverage. Therefore,
extending § 155.320(d)(4)(ii) indefinitely
would prove to be redundant in light of
the proposed changes discussed earlier
in preamble.
We seek comment on these proposals.
9. Annual Eligibility Redetermination
(§ 155.335)
We solicit comments on incorporating
the net premium, MOOP, deductible,
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and annual out-of-pocket costs (OOPC)
of a plan into the re-enrollment
hierarchy as well as additional criteria
or mechanisms HHS could consider to
ensure the Exchange hierarchy for reenrollment aligns with plan generosity
and consumer needs, such as, reenrolling a current bronze QHP enrollee
into an available silver QHP with a
lower net premium and higher plan
generosity offered by the same QHP
issuer.
In the Patient Protection and
Affordable Care Act; Annual Eligibility
Redeterminations for Exchange
Participation and Insurance
Affordability Programs; Health
Insurance Issuer Standards Under the
Affordable Care Act, Including
Standards Related to Exchanges final
rule, we established the renewal and reenrollment hierarchy at § 155.335(j) to
minimize potential enrollment
disruptions. Under § 155.335(j), we
modified the standards for reenrollment in coverage through
Exchanges by proposing, in paragraph
(j)(1), that if an enrollee remains eligible
for enrollment in a QHP through the
Exchange upon annual redetermination,
and the product under which the QHP
in which he or she was enrolled remains
available for renewal, consistent with
§ 147.106 such enrollee will have his or
her enrollment in a QHP through the
Exchange under the product renewed
unless he or she terminates coverage,
including termination of coverage in
connection with voluntarily selecting a
different QHP, in accordance with
§ 155.430. In this situation, we
proposed that the QHP in which the
enrollee will be renewed will be
selected according to the following
order of priority: (1) In the same plan as
the enrollee’s current QHP; (2) if the
enrollee’s current QHP is not available,
the enrollee’s coverage will be renewed
in a plan at the same metal level as the
enrollee’s current QHP; (3) if the
enrollee’s current QHP is not available
and the enrollee’s product no longer
includes a plan at the same metal level
as the enrollee’s current QHP, the
enrollee’s coverage will be renewed in
a plan that is one metal level higher or
lower than the enrollee’s current QHP;
and (4) if the enrollee’s current QHP is
not available and the enrollee’s product
no longer includes a plan that is at the
same metal level as, or one metal level
higher or lower than the enrollee’s
current QHP, the enrollee’s coverage
will be renewed in any other plan
offered under the product in which the
enrollee’s current QHP is offered in
which the enrollee is eligible to enroll.
Under paragraph (j)(2), we finalized
standards to address re-enrollment in
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651
situations in which no plans under the
product under which an enrollee’s QHP
is offered are available through the
Exchange for renewal, consistent with
§ 147.106. In this situation, the enrollee
may be enrolled in a QHP under a
different product offered by the same
issuer, to the extent permitted by
applicable state law, unless the enrollee
terminates coverage including
termination of coverage in connection
with voluntarily selecting a different
QHP, in accordance with § 155.430. In
such cases, the re-enrollment will occur
according to the following order of
priority: (1) In a QHP through the
Exchange at the same metal level as the
enrollee’s current QHP in the product
offered by the issuer that is the most
similar to the enrollee’s current product;
(2) if the issuer does not offer another
QHP through the Exchange at the same
metal level as the enrollee’s current
QHP, the enrollee will be re-enrolled in
a QHP through the Exchange that is one
metal level higher or lower than the
enrollee’s current QHP in the product
offered by the issuer through the
Exchange that is the most similar to the
enrollee’s current product; and (3) if the
issuer does not offer another QHP
through the Exchange at the same metal
level as, or one metal level higher or
lower than the enrollee’s current QHP,
the enrollee will be re-enrolled in any
other QHP offered through the Exchange
by the QHP issuer in which the enrollee
is eligible to enroll.
In the 2017 Payment Notice, we
finalized the rule that provides for autoreenrollment in a QHP offered by
another issuer through the Exchange, as
opposed to permitting a QHP issuer that
no longer has a QHP available to an
enrollee through an Exchange to
reenroll the enrollee outside the
Exchange in order to maintain coverage
with APTC and CSRs for the majority of
Exchange enrollees who are receiving
these subsidies. Under this rule, we
established, beginning in PY 2017, that
if no QHP from the same issuer is
available to enrollees through the
Exchange, then to the extent permitted
by applicable State law, the Exchange
could direct alternate enrollments for
such enrollees into a QHP from a
different issuer unless the enrollee
terminates coverage, including
termination of coverage in connection
with voluntarily selecting a different
QHP, in accordance with § 155.430. If
the applicable State regulatory authority
declines to act to direct this activity,
such alternate enrollments would be
directed by the Exchange. With regard
to how Exchanges will determine which
plans such enrollees should be auto-
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reenrolled into, we noted that this
policy provided considerable flexibility
to Exchanges to implement this rule, in
recognition of the operational realities
of implementing a re-enrollment
hierarchy in the often unique
circumstances in which an issuer no
longer has QHPs available to an enrollee
through the Exchange.
HHS is aware of stakeholder concerns
that the enrollees in the FFEs may fail
to return to the Exchange to make an
active plan selection in situations in
which changing plans could be
beneficial to the enrollee, and that reenrollment rules may default enrollees
into less beneficial plans than other
available plans.
We solicit comments on whether
factors such as net premium, MOOP,
deductible, and OOPC should be
reflected in a revised re-enrollment
hierarchy for all Exchanges, with
consideration for the potential impact of
the actuarial value de minimis
guidelines proposed in this rule at
§§ 156.135 and 156.140 on cost-sharing.
For example, HHS could consider reenrolling a current bronze QHP enrollee
into an available silver QHP with a
lower net premium and higher plan
generosity offered by the same QHP
issuer. Additionally, HHS could
consider re-enrolling a current silver
QHP enrollee into another available
silver QHP, under the enrollee’s current
product and with a service area that is
serving the enrollee that is issued by the
same QHP issuer, that has lower OOPC.
We also solicit comments on additional
criteria or mechanisms HHS could
consider to ensure the hierarchy for reenrollment in all Exchanges takes into
account plan generosity and consumer
needs beyond merely the retention of
the most similar plan available.
10. Administration of Advance
Payments of the Premium Tax Credit
and Cost-Sharing Reductions (§ 155.340)
HHS is proposing to amend
§§ 155.240(e), 155.305(f)(5), and 155.340
to clarify that an Exchange is required
to prorate the calculation of premiums
for individual market policies and the
calculation of the APTC in cases where
an enrollee is enrolled in a particular
policy for less than the full coverage
month, including when the enrollee is
enrolled in multiple policies within a
month, each lasting less than the full
coverage month. HHS would require all
Exchanges, including the Exchanges on
the Federal platform and State
Exchanges that operate their own
eligibility and enrollment platforms to
implement the proposed proration
methodology in the PY 2024 benefit.
HHS is limiting this proposed
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requirement to individual market
policies because many SHOP
Exchanges, particularly those that
operate in a leaner fashion, like the
federally-facilitated SHOP Exchanges,
do not calculate premiums.
Additionally, APTC are not available
through SHOPs.
Currently, Exchanges apply APTC to
an applicable taxpayer’s monthly
premium based on calculation,
eligibility, and administration
requirements from two sources: (1) IRS
regulations at 26 CFR 1.36–B–1 through
1.36B–3, and (2) HHS regulations at 45
CFR part 155. IRS regulation at 26 CFR
1.36B–3(d) calculates PTC eligibility for
a partial month of coverage as the lesser
of the premiums for the month (reduced
by any amount of such premiums
refunded), or the monthly premium for
the second lowest cost silver plan
(SLCSP) reduced by the taxpayer’s
monthly contribution amount. Although
26 CFR 1.36B–3(d) defines the
calculation of the premium assistance
amount for a coverage month, and thus
defines the calculation of the maximum
APTC amount an applicable taxpayer
may apply to their monthly premium, it
does not describe how APTC is
administered, which is regulated by
HHS. When administering APTC,
Exchanges must adhere to requirements
at 45 CFR 155.305(f), which establishes
eligibility and calculation requirements
for APTC, 45 CFR 155.310(d)(2)(i),
which requires the Exchange to permit
an applicable taxpayer to accept less
than the full amount of APTC for which
they are eligible, and 45 CFR 155.340,
which defines how Exchanges must
administer and allocate APTC amounts
applied to enrollees’ monthly
premiums.
Calculating maximum APTC as
required under § 155.305(f) obligates the
Exchange to calculate payments of the
APTC in accordance with the way PTC
is calculated at 26 CFR 1.36B–3. The
IRS methodology described at 26 CFR
136.B–3 is appropriate for PTC, as PTC
is calculated retrospectively and can
account for the changes in an applicable
taxpayer’s premium across the entire tax
year before the applicable final amount
is calculated at the time of tax filing.
Conversely, Exchanges administer
APTC prospectively to issuers by
advancing premium assistance to
issuers based on enrollees’ eligibility
determinations and elections, which
could change month-to-month before
final reconciliation occurs. Currently,
HHS regulations governing APTC
eligibility and administration do not
contain specific requirements on how
APTC should be administered for a
policy in which an enrollee is enrolled
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for less than the full coverage month.
While the FFEs and SBE–FPs already
prorate APTC and premium amounts,
State Exchanges presently handle this
scenario inconsistently, which may
result in over-payment of APTC to
issuers that exceeds the monthly PTC
amount for which an applicable
taxpayer will be eligible, thereby
potentially triggering a federal income
tax liability for the applicable
taxpayer.269
By amending §§ 155.240(e),
155.305(f)(5) and 155.340 to require that
the Exchange prorate the calculation of
premiums and APTC in cases where an
enrollee is enrolled in a particular
policy for less than the full coverage
month, HHS would provide needed
clarification for all Exchanges, resulting
in greater consistency in APTC
administration and the consumer
experience.
As explained earlier in this preamble,
HHS proposes to add language at
§ 155.240(e)(2) to apply the
methodology currently applicable in the
FFEs and SBE–FPs to all Exchanges,
beginning with PY 2024. This proposed
amendment to § 155.240(e) would
support the accurate and consistent
calculation of partial-month enrollment
premium amounts in a way that aligns
with the method of administering the
APTC that we propose in
§§ 155.305(f)(5) and 155.340.
HHS also proposes to amend
§ 155.305(f)(5) by adding that APTC
must be calculated in accordance with
26 CFR 1.36B–3, subject to the prorating
methodology at proposed § 155.340(i).
This would create uniform standards for
taxpayers on how the APTC will be
calculated for months in which an
enrollee is enrolled in a particular
policy for less than the full coverage
month.
Finally, HHS proposes to amend
§ 155.340 by adding paragraph (i) to
establish that, beginning with the PY
2024 benefit, all Exchanges would be
required to calculate applied APTC
when an enrollee is enrolled in a
particular policy for less than the full
coverage month, including when the
enrollee is enrolled in multiple policies
within a month, each lasting less than
the full coverage month, as equal to the
product of (1) the APTC applied on the
269 HHS notes that an applicable taxpayer’s excess
APTC and accompanying tax liability for such
excess APTC is determined after the taxpayer’s PTC
for the year of coverage has been calculated.
Consequently, the potential to incur income tax
liability for excess APTC is not limited to situations
in which a consumer is enrolled in a policy for less
than a full coverage month and our proposed policy
will not completely eliminate an applicable
taxpayer’s risk of incurring tax liability from excess
APTC.
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policy for 1 month of coverage divided
by the number of days in the month,
and (2) the number of days for which
coverage is provided on that policy
during the applicable month. This
methodology would align with the
prorated calculation of premium
amounts under § 155.240(e).
Furthermore, this proposed
methodology would provide Exchanges
with a consistent method of prorating
applied APTC amounts that aligns with
the calculation of PTC under 26 CFR
1.36B–3(d) while ensuring that the
calculation of APTC in situations in
which an enrollee is enrolled in a
particular policy for less than the full
coverage month, including when the
enrollee is enrolled in multiple policies
within a month, each lasting less than
the full coverage month, does not cause
the APTC to exceed the PTC for the
month as calculated per 26 CFR 1.36B–
3(d). This proposal would create
consistency for issuers across all
Exchanges, help the enrollee by keeping
the enrollee’s share of premiums stable,
and reduce the instances in which a
taxpayer would have to repay excess
APTC during tax filing per section
36B(f)(2) of the Code and 26 CFR 1.36B–
4. If the proposal results in an excess of
PTC over the amount of APTC paid for
an enrollee’s coverage (net PTC), the
applicable taxpayer would claim the net
PTC as a refundable tax credit.
These proposals are intended to
protect consumers. State Exchanges are
not currently required to prorate APTC
for mid-month policy changes and, as a
result, HHS may overpay APTC
amounts to issuers in State Exchanges
not currently prorating in this manner.
Income tax liability due to excess APTC
could pose significant financial burden
to applicable taxpayers, particularly
low-income taxpayers, and creates
confusion about the affordability of
health care coverage offered by an
Exchange.
Additionally, E.O. 14009 270 calls for
a review of policies or practices that
may present unnecessary barriers to
individuals and families attempting to
access Medicaid or ACA coverage, or
that may reduce the affordability of
coverage or financial assistance for
coverage. Low-income populations are
more likely to qualify for many federal
and state health and human services
programs, including APTC.271 The
proposed methodology aligns with the
goals of E.O. 14009, as it would promote
270 Executive Order 14009; 86 FR 7793 (Feb. 2,
2021).
271 See https://familiesusa.org/wp-content/
uploads/2021/04/2021-79_ARP-CoverageSummary_Analysis_03_2021.pdf.
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consumer protection, encourage
continuity of coverage for individuals,
and ensure consistent application of
APTC which makes Exchange coverage
more affordable.
Establishing a proration methodology
that would apply universally across all
Exchange types—FFEs, SBE–FPs, and
State Exchanges—would ensure all
Exchanges and issuers report and pay
APTC similarly when enrollees are
enrolled in a particular policy for less
than the full coverage month, including
when the enrollee is enrolled in
multiple policies within a month, each
lasting less than the full coverage
month. HHS notes that this proposal
would codify a methodology that the
FFEs, SBE–FPs, and some State
Exchanges already utilize to prorate
APTC.
We are proposing to require this
proposed proration methodology for all
Exchanges to implement beginning with
the PY 2024 benefit, as HHS
acknowledges that implementing this
proposed methodology will require
implementation and operational costs
and time on the part of most State
Exchanges. HHS seeks comment on this
proposal. HHS also seeks comment on
whether PY 2023 benefit
implementation is feasible.
10. Special Enrollment Periods—Special
Enrollment Period Verification
(§ 155.420)
In 2017, the HHS Market Stabilization
Rule preamble explained that HHS
would implement pre-enrollment
verification of eligibility for certain
special enrollment periods in all
Exchanges on the Federal platform.272
HHS also clarified its intention to not
establish a regulatory requirement that
all Exchanges conduct special
enrollment period verifications in order
to allow State Exchanges additional
time and flexibility to adopt policies
that fit the needs of their state.273
However, all State Exchanges conduct
verification of at least one special
enrollment period type, and most State
Exchanges have implemented a process
to verify the vast majority of special
enrollment periods requested by
consumers.
We are now proposing to amend
§ 155.420 to add new paragraph (g) to
state that Exchanges may conduct preenrollment verification of eligibility for
special enrollment periods, at the option
of the Exchange, and that Exchanges
may provide an exception to preenrollment special enrollment period
verification for special circumstances,
272 82
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which could include natural disasters or
public health emergencies that impact
consumers or the Exchange. This is in
order to encourage State Exchanges to
conduct special enrollment period
verification but also allow the FFEs,
SBE–FPs, and State Exchanges to
maintain flexibility in implementing
and operating special enrollment period
verification.
Since 2017, Exchanges on the Federal
platform implemented pre-enrollment
special enrollment period verification
for certain special enrollment period
types commonly used by consumers to
enroll in coverage. New consumers,
meaning consumers who are not
currently enrolled in coverage through
the Exchange, who apply for coverage
through a special enrollment period
type that requires pre-enrollment
verification by the Exchanges on the
Federal platform must have their
eligibility electronically verified using
available data sources or submit
supporting documentation to verify
their eligibility for the special
enrollment period before their
enrollment can become effective. As
stated in the HHS Marketplace
Stabilization Rule, pre-enrollment
special enrollment period verification is
only conducted for consumers newly
enrolling due to the potential for
additional burden on issuers and
confusion for consumers if required for
existing enrollees.274
While pre-enrollment special
enrollment period verification can
decrease the risk for adverse selection
and improve program integrity, it can
also deter eligible consumers from
enrolling in coverage through a special
enrollment period because of the barrier
of document verification. Younger, often
healthier consumers submit acceptable
documentation to verify their special
enrollment period eligibility at much
lower rates than older consumers,
which can negatively impact the risk
pool. Additionally, our experience
operating the FFEs and the Federal
platform shows that pre-enrollment
special enrollment period verification
disproportionately negatively impacts
Black and African American consumers
who submit acceptable documentation
to verify their special enrollment period
eligibility at much lower rates than
White consumers.
To support program integrity and
streamline the consumer experience, we
are also proposing that the Exchanges
on the Federal platform would only
continue to conduct pre-enrollment
verification of eligibility for one type of
special enrollment period: The special
FR at 18355 through 18358.
273 Ibid.
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enrollment period for new consumers
who attest to losing minimum essential
coverage.275 The loss of minimum
essential coverage special enrollment
period type comprises the majority,
about 58 percent, of all special
enrollment period enrollments on the
Exchanges on the Federal platform and
has electronic data sources that can be
leveraged for auto-verification. By
verifying eligibility for this special
enrollment period type and not for other
special enrollment periods, the
Exchanges on the Federal platform
could limit the negative impacts of
special enrollment period verification
and decrease overall consumer burden
without substantially sacrificing
program integrity.
We seek comment on these proposals.
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11. General Program Integrity and
Oversight Requirements (§ 155.1200)
The Payment Integrity Information
Act of 2019 (PIIA) 276 requires federal
agencies to annually identify, review,
measure, and report on the programs
they administer that are considered
susceptible to significant improper
payments. Pursuant to the PIIA, HHS is
in the planning phase of establishing a
State Exchange Improper Payment
Measurement (SEIPM) program, as HHS
has determined that APTC payments
may be susceptible to significant
improper payments and are subject to
additional oversight. Therefore, we
announced that we would be
implementing the SEIPM program and
establishing requirements, which are
laid out in proposed provisions in a new
subpart P.277
The SEIPM program would allow for
the accurate calculation of an improper
payment rate through the development
of annual improper payment estimates
and subsequent reporting of improper
payments. To ensure improper
payments can be calculated accurately,
the SEIPM program would require State
Exchanges to provide HHS with access
to certain State Exchange data,
including eligibility determinations and
enrollment information. State
Exchanges with significant improper
payments may also be required to
develop corrective action plans (CAP) to
correct the causes of the identified
improper payments.
Currently, HHS approves or
conditionally approves a state’s
Blueprint Application to establish a
State Exchange based on an assessment
275 See
45 CFR 155.420(d)(1)(i).
Law 116–117 (Mar. 2, 2020).
277 Presentation and materials provided to the
then operational State Exchanges as part of ‘‘All
States’’ meeting held on February 21, 2019.
276 Public
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of a state’s attested compliance with
relevant Exchange statutory and
regulatory requirements at section 1311
of the ACA and 45 CFR part 155.
Thereafter, State Exchanges must meet
specific program integrity and oversight
requirements specified at section
1313(a) of the ACA, as well as
§§ 155.1200 and 155.1210. These
requirements provide HHS with the
authority to oversee the Exchanges after
their establishment. There are various
annual reporting requirements for State
Exchanges at § 155.1200(b) including
the annual submission of: (1) A
financial statement presented in
accordance with generally accepted
accounting principles (GAAP); (2) an
annual report showing compliance with
Exchange requirements; (3) performance
monitoring data; and (4) the annual
submission of a report on instances in
which the State Exchange did not
reduce an enrollee’s premium by the
amount of the APTC in accordance to
§ 155.340(g)(1) and (2).
Additionally, under § 155.1200(c),
each State Exchange is required to
engage or contract with an independent
qualified auditing entity that follows
generally accepted government auditing
standards (GAGAS) to perform annual
independent external financial and
programmatic audits. State Exchanges
are required to provide HHS with the
results of the audits, to inform HHS of
any material weakness or significant
deficiency identified in the audit, to
develop and inform HHS of any CAPs
for such material weakness or
significant deficiency, and to make a
public summary of the results of the
external audit. The CAPs are monitored
by HHS until the findings are resolved.
Specifically, for the annual
programmatic audit requirement, State
Exchanges must ensure that auditors
address compliance with subparts D and
E under 45 CFR part 155, and other
requirements under part 155, as
specified by HHS. This allows HHS to
oversee compliance with eligibility and
enrollment standards to ensure that
State Exchanges are conducting accurate
eligibility determinations and
enrollment transactions.
We propose to add new § 155.1200(e)
to permit a State Exchange to meet the
requirement to conduct an annual
independent external programmatic
audit, as described at § 155.1200(c), by
completing the required annual SEIPM
program process. Therefore, HHS would
generally accept a State Exchange’s
completion of the SEIPM process for a
given benefit year as acceptable to meet
the annual programmatic audit
requirement for that benefit year. We
also propose to amend § 155.1200(c) to
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cross-reference proposed § 155.1200(e)
to ensure the coordination of these two
requirements. We believe that these
proposed changes would ensure HHS
retains necessary oversight authority of
the State Exchanges, particularly in the
event that there are changes to the
SEIPM program in future benefit years.
However, we would strive to provide
ample advance notice of any potential
changes to the SEIPM program, or to
potentially allow for flexibility to satisfy
requirements at paragraph (c) in the
event the SEIPM program is
unexpectedly suspended. These
proposed changes would eliminate
duplicate efforts specific to the annual
programmatic audit requirement and
reduce burden on the State Exchanges.
They would also allow HHS to continue
to require programmatic audits of other
subparts beyond eligibility and
enrollment, should HHS deem it
necessary in future years to ensure
programmatic oversight and program
integrity.
As described in new proposed subpart
P, section 14, HHS intends to
implement the SEIPM program
beginning with the 2023 benefit year.
Thus, measurement of improper
payments for the 2023 benefit year
would take place in benefit year 2024,
and reporting of the improper payment
rate would not occur until November
2025, at the earliest. Thereafter, State
Exchanges that HHS determines must
submit CAPs would do so no sooner
than 2026. We would continue to
closely coordinate with State Exchanges
as these timeframes are finalized and
provide as much advance notice as
possible of relevant deadlines as they
come due.
We seek comment on these proposals.
12. State Exchange Improper Payment
Measurement Program (§§ 155.1500
Through 155.1540)
In 2016, HHS completed a risk
assessment of the APTC program.
Similar to other public-facing benefit
programs, HHS determined that the
APTC program is susceptible to
significant improper payments, and as a
result, HHS announced plans to
increase the oversight of the APTC
program through the development and
reporting of annual improper payment
estimates, and facilitating corrective
actions.278 At that time, we also
announced that we would undertake
rulemaking before implementing the
improper payment measurement
methodology.
278 Ibid.
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In line with our prior
announcement 279 HHS is establishing a
pilot program and, as mentioned in
section 12, is proposing regulations
governing HHS’ SEIPM program. The
SEIPM program would address all HHS
and State Exchange responsibilities so
that HHS can accurately calculate the
SEIPM improper payment rate.
Specifically, these proposed regulations
would pertain to State Exchanges that
operate their own eligibility and
enrollment platform. These proposed
regulations would not pertain to State
Exchanges that use the Federal platform
to conduct eligibility determinations
and enrollment transactions.
Additionally, the proposed regulations
would contain key SEIPM program
definitions and specify the manner in
which HHS would collect information
from State Exchanges in order to
estimate the SEIPM improper payment
rate. The proposed regulations would
also account for the State Exchanges’
obligation to provide the required
information and the manner in which
State Exchanges can contest HHS’
findings regarding errors. Also, the
proposed regulations would convey
State Exchange responsibilities
regarding CAPs that State Exchanges
must submit to HHS for approval in
order to correct improper payments.
We would calculate the SEIPM
improper payment rate for each benefit
year and expect the first calculation
beginning with the 2023 benefit year.
Since the rate cannot be calculated until
all SEIPM appeals are resolved, we
anticipate that the improper payment
rate for the 2023 benefit year would be
published in approximately November
2025. The proposed regulations are
necessary for HHS to properly oversee
the State Exchanges and ensure that
errors resulting in improper payments
are corrected.
Current regulations found at 45 CFR
155.1200 and 155.1210 require that a
State Exchange have financial and
operational safeguards in place to avoid
making inaccurate eligibility
determinations, including those related
to APTC, CSR, and enrollments.
However, as we stated in our 2013
regulation, §§ 155.1200 and 155.1210
were not intended to be a part of any
measurement program that may have
been required under the Improper
Payments Elimination and Recovery Act
279 Ibid.
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of 2010,280 as updated by PIIA.281
Current program integrity audits,
especially as they relate to subparts D
(eligibility) and E (enrollment) of part
155, focus on the processes and
procedures that a State Exchange has
established to verify that a qualified
individual meets eligibility
requirements. Current regulations at
§ 155.1200(c) require State Exchanges to
hire an independent qualified auditing
entity and submit the external audit
results to HHS. These programmatic
audits do not review, estimate, or report
on the amounts or rates of improper
payments as the result of eligibility
determination errors made by State
Exchanges. To meet the requirements of
PIIA, to reduce burden on State
Exchanges, and to ensure consistency
across State Exchanges in terms of our
review methodology, we propose to
update programmatic auditing
requirements such that the completion
of the annual SEIPM program, as
required by this subpart P, would satisfy
the current auditing requirements
prescribed in § 155.1200(c). As we
transition, we would coordinate our
efforts with the CMS Center for
Consumer Information and Insurance
Oversight and the CMS Office of
Financial Management. The goal of this
coordination is to gain efficiencies and
avoid duplicative requirements that
would unnecessarily increase State
Exchanges’ workload, as well as the
requirement and burden of hiring
independent qualified auditing entities.
Doing so would enable HHS and its
Federal contractors to obtain consistent
information across all State Exchanges
and to meet our statutory mandate
under PIIA. Therefore, we propose to
establish a new subpart P under 45 CFR
part 155 (containing §§ 155.1500
through 155.1540) to codify the SEIPM
program requirements.
We propose that the proposed
regulations at subpart P would be
applicable in 2023 when the SEIPM
program is proposed to begin its
operations.
280 Public Law 111–204, 124 Stat. 2224 (July 22,
2010). The original Improper Payment Information
Act, Public Law 107–300 (2002) has been updated
by it successors, which include the Improper
Payment Elimination and Recovery Act, Public Law
111–204 (2010), the Improper Payment Elimination
and Recovery Improvement Act, Public Law 112–
248 (2012), and the Payment Integrity Information
Act, Public Law 116–117 (2020).
281 Patient Protection and Affordable Care Act;
Program Integrity: Exchange, SHOP, Premium
Stabilization Programs, and Market Standards,
Proposed Rule, 78 FR 37032 at 37053 (Jun. 19,
2013).
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655
a. Purpose and Definitions (§ 155.1500)
We are proposing to add new subpart
P to part 155, which would address
various State Exchange and HHS
responsibilities. HHS may use Federal
contractors as needed to support the
performance of statistical, review, or
other activities.
We are proposing to add new
§ 155.1500 to convey the purpose of
subpart P and definitions that are
relevant to the SEIPM program.
• At paragraph (a), we are proposing
the purpose of subpart P as setting forth
the requirements of the SEIPM program
for State Exchanges.
• At paragraph (b), we are proposing
to codify the definitions that are specific
to the SEIPM program and key to
understanding the process
requirements.
• We are proposing the definition of
‘‘Appeal of redetermination decision (or
appeal decision)’’ to mean HHS’ appeal
decision resulting from a State
Exchange’s appeal of a redetermination
decision.
• We are proposing the definition of
‘‘Corrective action plan (CAP)’’ to mean
the plan a State Exchange develops in
order to correct errors resulting in
improper payments.
• We are proposing the definition of
‘‘Error’’ to mean a finding by HHS that
a State Exchange did not correctly apply
a requirement in subparts D and E of
part 155 regarding eligibility for and
enrollment in a qualified health plan;
APTC, including the calculation of
APTC; redeterminations of eligibility
determinations during a benefit year; or
annual eligibility redeterminations.
• We are proposing the definition of
‘‘Error findings decision’’ to mean HHS’
enumeration of errors made by a State
Exchange, including a determination of
how the enumerated errors inform
improper payment estimation and
reporting requirements.
• We are proposing the definition of
‘‘Redetermination of an error findings
decision (or redetermination decision)’’
to mean HHS’ decision resulting from a
State Exchange’s request for a
redetermination of HHS’ error findings
decision.
• We are proposing the definition of
‘‘Review’’ to mean the process of
analyzing and assessing data submitted
by a State Exchange to HHS in order for
HHS to determine a State Exchange’s
compliance with subparts D and E of
part 155 as it relates to improper
payments.
• We are proposing the definition of
‘‘State Exchange improper payment
measurement (SEIPM) program’’ to
mean the process for determining
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estimated improper payments and other
information required under the PIIA,
and implementing guidance, for APTC,
which includes a review of a State
Exchange’s determinations regarding
eligibility for and enrollment in a QHP;
the calculation of APTC;
redeterminations of eligibility
determinations during a benefit year;
and annual eligibility redeterminations.
b. Program Notification and Planning
Process (§ 155.1505)
We are proposing to add new
§ 155.1505 to outline the annual
program notification requirements
related to the SEIPM program.
• At paragraph (a), we are proposing
the requirements associated with HHS’
responsibility to notify the State
Exchanges prior to the start of the
measurement year regarding
information pertinent to the SEIPM
program and the program’s upcoming
measurement cycle, which may include
but would not be limited to review
criteria; key changes from prior
measurement cycles, where applicable;
or other modifications regarding specific
SEIPM activities. This notification
would occur during the benefit year
(that is, the year under review for which
data would be collected), which
immediately precedes the measurement
year (that is, the year in which the
measurement will be completed). The
measurement cycle would conclude
with the reporting year during which all
data issues would be resolved and the
improper payment rate would be
calculated and published.
• At paragraph (b), we are proposing
the requirements associated with HHS’
responsibility to notify the State
Exchanges prior to the measurement
year regarding SEIPM schedules, which
will include relevant timelines. For
example, among other things, the SEIPM
annual program schedule would detail
the time period during which HHS
would provide the SEIPM data request
form to State Exchanges with
instructions regarding how to complete
each part of the form. The SEIPM
annual program schedule would also
provide the deadlines prescribed for
State Exchanges to complete each part
of the form.
• At paragraph (c), we are proposing
the requirements associated with
information to be provided by State
Exchanges to HHS regarding the
operations and policies of the State
Exchange, and changes that have been
made by the State Exchange which
could impact the SEIPM review process
such as changes to business rules,
business practices, policies, and
information systems (for example, data
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elements and table relationships), which
are used to review the State Exchange’s
execution of consumer verifications,
verification inconsistency resolutions,
eligibility determinations, enrollment
management, and APTC calculations.
HHS anticipates that State Exchanges
may make changes periodically that
could affect a State Exchange’s
eligibility determinations or other
decisions relating to the SEIPM
program. For example, HHS would need
to be made aware of changes to the State
Exchange’s technical platform or
modifications to its policies or
procedures as these changes may impact
specific review criteria, the data to be
reviewed and ultimately a State
Exchange’s eligibility determinations.
Other decisions or changes by a State
Exchange could affect the SEIPM
program, including any changes
regarding items such as naming
conventions or definitions of specific
data elements used in the SEIPM
program, since any lack of clarity in
how determinations and payment
calculations are being made could
impact HHS’ decisions regarding errors
made by the State Exchanges.
c. Data Collection (§ 155.1510)
We are proposing to add new
§ 155.1510 to address the data collection
requirements to support the SEIPM
process. Consistent with this, we are
establishing an SEIPM data request form
that would incorporate two basic parts:
(1) The pre-sampling data request; and
(2) the sampled unit data request. We
would use this form to compile
information from each State Exchange
in an ongoing manner.
• At paragraph (a)(1), we are
proposing the requirement that the State
Exchange annually provide presampling data to HHS by the deadline
provided in the annual program
schedule. The pre-sampling data request
would provide HHS with essential
information about the composition of
the State Exchange’s application
population in order to appropriately
stratify and sample the population. In
the pre-sampling data request, HHS
would provide each State Exchange
with a list of policy identifications (that
is, policy ID, which is a unique
identifier for a policy) that would have
been analyzed to produce an aggregate
applied APTC greater than $0. HHS
would request each State Exchange to
map the given policy IDs for their State
Exchange to a tax household identifier
(or a proxy if the State Exchange does
not have an equivalent identifier) and
provide characteristics of the
population, which include counts of (or
an indication of the presence in)
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different verification inconsistency
types and the number of tax household
members. HHS would then analyze
these characteristics and select a
statistically valid sample according to
OMB requirements for estimating
improper payments. For these sampled
units, HHS would also request
associated application and enrollment
data and supporting consumer
documentation, which will be used to
conduct its review. HHS has submitted
a PRA package to OMB for approval as
detailed in ICR sections IV.G.1. and 2 of
this proposed rule.
As explained below in section IV,
Collection of Information Requirements,
the SEIPM data request form has been
submitted to the OMB for review and
approval. The pre-sampling data are a
building block for the development of
the sampled unit data, which associate
consumer attestation documentation to
each sampled unit. As such, the timely
receipt of the completed pre-sampling
data from the State Exchange is
imperative.
The cumulative sample size across all
State Exchanges and the associated State
Exchange-specific sample size would be
determined using a statistically valid
sampling and estimation methodology,
in a manner that is consistent with
Appendix C of OMB Circular A–123 and
that would be designed to produce an
aggregate estimated improper payment
rate across all State Exchanges with a 3
percent margin of error and a 95 percent
confidence interval.282 HHS researched
various sampling methodologies, for
example, simple random sampling,
stratified random sampling, and
probability proportional to size
sampling, taking into account level of
burden, (for example, time and
resources), on State Exchanges as well
as enabling meaningful reviews for each
State Exchange. Based on information
currently available, we expect that a
sample size of approximately 100 tax
households for each State Exchange will
be necessary to achieve this precision
level. HHS will provide State Exchanges
with an annual program notification
that may include sampling methodology
and sample size. Burden estimates
contained within this document have
been created using that sample size
estimate. There are a variety of factors
that we may consider each review cycle
to determine the sample size and
282 While OMB Memorandum M–21–19, dated
March 5, 2021 at https://www.whitehouse.gov/wpcontent/uploads/2021/03/M-21-19.pdf no longer
includes the requirements of a 95 percent
confidence interval or a 3% margin of error, we are
using those measures that were included in
Appendix C to the OMB circular prior to the 2021
changes.
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methodology. Such factors may include
the size of the State Exchange measured
either by the number of payments or by
the total dollar amount, specific factors
that drive the improper payment rate,
the number of State Exchanges under
measurement for a given review cycle,
or improper payment rates and margins
of error from previous benefit years.
Regardless of potential variations from
one review cycle to the next, we would
continue to use a methodology that
supports statistically valid sampling and
estimation.
• As stated previously, we would
provide to each State Exchange an
SEIPM data request form that includes
the sampled unit data request. At
paragraph (a)(2) we are proposing the
requirement that annually the State
Exchange provide to HHS, in a manner
and within a deadline specified by HHS
in the annual program schedule,
sampled unit data. To meet this
requirement, a State Exchange can
submit consumer-submitted
documentation in one or more batches
so long as all of the batches are provided
to HHS within the deadline specified in
the annual program schedule. The
sampled unit data request would
include the list of sampled units and the
associated information specific to each
unit. The information required for the
sampled units would include data and
supporting documentation regarding
various State Exchange functions, for
example, electronic verifications,
manual reviews of data matching
inconsistencies, special enrollment
period verifications, eligibility
determinations, redeterminations,
enrollment reconciliation, and plan
management.
• At paragraph (b), we are proposing
language regarding requests for
extension which may be submitted by
State Exchanges. Given the importance
of the time frames associated with the
measurement process, we do not
anticipate granting extensions in most
situations. The approval of extension
requests would be reserved for extreme
circumstances that directly impact
operations of the particular State
Exchange. This includes situations such
as natural disasters, interruptions in
business operations such as major
system failures, or other extenuating
circumstances.
• At paragraph (c), we are proposing
language regarding potential
consequences as a result of a State
Exchange’s failure to timely provide the
information in accordance with the
schedule and deadlines detailed in the
annual program schedule, or in
response to a request for extension in
paragraph (b). As a result of not timely
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providing required data, we may cite
errors due to lack of documentation to
support the state’s eligibility or payment
decisions, inadvertently resulting in an
increase in the State Exchange’s
improper payment rate.
d. Review Process and Improper
Payment Rate Determination
(§ 155.1515)
We are proposing to add new
§ 155.1515 to address the review process
and the determination of the improper
payment rate.
• At paragraph (a), we are proposing
that HHS would keep a record of the
status of receipt for information
requested from each State Exchange for
a minimum of 10 years.
• At paragraph (b), we are proposing
to review the following for compliance
with subparts D and E of part 155: A
State Exchange’s determinations
regarding eligibility for and enrollment
in a QHP; APTC, including the
calculation of APTC; redeterminations
of eligibility determinations during a
benefit year; and annual eligibility
redeterminations. As part of the review
process, HHS would issue error findings
decisions and render redeterminations
of error findings decisions within the
timeframe specified in the annual
program schedule.
• At paragraph (c), we are proposing
to notify each State Exchange of HHS’
error findings decisions for that State
Exchange and HHS’ calculation of that
State Exchange’s improper payment
rate.
e. Error Findings Decisions (§ 155.1520)
We are proposing to add new
§ 155.1520 to address the issuance of
error findings decisions and the content
of error findings decisions.
• At paragraph (a), we are proposing
that HHS will issue error findings
decisions to each State Exchange. While
we anticipate that error findings
decisions would be issued at regular
and recurring points of time within the
measurement year during each review
cycle, we recognize that certain events
could result in necessary delays, for
example, public health emergencies,
natural disasters, interruptions in
business practices, or other extenuating
circumstances. Thus, should these types
of events warrant additional time, we
would notify State Exchanges of the
delay via the CMS website. In the
situation where no errors are found
during the course of the review, HHS
will still issue an error findings decision
to the State Exchange indicating that no
errors were identified. The error
findings decisions are intended to be
communicated to each respective State
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657
Exchange only and would not be
published publicly.
• At paragraph (b), we are proposing
language regarding the specific
information that would be included in
error findings decisions. We propose
that, at a minimum, error findings
decisions will include HHS’ findings
regarding errors made by the State
Exchange and information about the
State Exchange’s right to request a
redetermination of the error findings
decision in accordance with proposed
§ 155.1525. We anticipate that these are
the key items to be conveyed through
the error findings decision. However,
should we determine that other
information is warranted, the language
of proposed § 155.1520 does not
prohibit additional information from
being included within the error findings
decision.
f. Redetermination of Error Findings
Decisions (§ 155.1525)
We are proposing to add new
§ 155.1525 to address a State Exchange’s
request for a redetermination as well as
HHS’ issuance of the redetermination
decision and the content of that
decision.
• At paragraph (a), we are proposing
language indicating a State Exchange’s
ability to request a redetermination of
the error findings decision within the
deadline prescribed in the annual
program schedule. During the period for
a State Exchange to request a
redetermination of the error findings
decision, HHS would consider a request
for an extension in extreme
circumstances, which includes but is
not limited to situations such as natural
disasters, interruptions in business
operations such as major system
failures, or other extreme circumstances.
While we recognize that each State
Exchange has a multitude of
responsibilities, HHS would not
otherwise accept any request for a
redetermination received after the
expiration of the deadline prescribed by
the annual program schedule, which is
designed to enable HHS to meet
deadlines for publication of the
improper payment rate.
• At paragraph (a)(1), we are
proposing language requiring that the
State Exchange identify the specific
error(s) for which the State Exchange is
requesting a redetermination. This
identification may pertain to a single
individual’s application or to a type of
error affecting a class of applications.
Since this redetermination constitutes a
review of the initial decision and not a
de novo investigation, the State
Exchange must base its request on
documentation and other information
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already submitted to HHS (for example,
if the application lacked income
information, the State Exchange may not
retrospectively seek this documentation
and add it to the record). Any issues
that do not relate to an error identified
by HHS in the initial error findings
decision would not be addressed.
• At paragraph (a)(2), we are
proposing language that the State
Exchange must include all data and
information that support the State
Exchange’s request for a
redetermination. Note that while State
Exchanges are able to submit data and
information in requesting a
redetermination, new information
submitted as part of the request for
redetermination should supplement
data previously submitted as part of the
SEIPM data request form for the benefit
year under review and would be
accepted at HHS’ discretion. State
Exchanges may not use the
redetermination process as a means to
circumvent prior deadlines for
submitting data or information to HHS.
• At paragraph (a)(3), we are
proposing language that would require a
State Exchange to provide an
explanation of how the data and
information submitted under paragraph
(a)(2) pertains to the error(s) identified
in the error findings decision. The State
Exchange should clearly articulate how
the data and information is related to
HHS’ findings, and also how it impacts
HHS findings. If a State Exchange does
not provide this explanation, HHS
would not anticipate or assume a State
Exchange’s reasoning in requesting a
redetermination on a particular error.
• At paragraph (b), we are proposing
language regarding the issuance of
redetermination decision. The
redetermination of an error findings
decision would be issued within the
deadline prescribed in the annual
program schedule. Our goal is to ensure
that each State Exchange has ample time
to assess the error findings decision,
give HHS adequate time to thoroughly
evaluate a State Exchange’s request for
a redetermination, and calculate an
improper payment rate in adequate time
to publish aggregate findings across all
State Exchanges in the Agency Financial
Report. As with the error findings
decision, we anticipate HHS’
redetermination decisions would be
issued at regular and recurring points of
time within the measurement year
during each review cycle and in
accordance with the annual program
schedule. However, we also recognize
that certain circumstances could result
in necessary delays, for example, public
health emergencies, natural disasters,
interruptions in business operations, or
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other extenuating circumstances. Thus,
we are proposing that if these types of
circumstances result in HHS needing
additional time to render the
redetermination decisions, a state
Exchange would be notified of the
delay.
• At paragraph (c), we are proposing
language conveying the minimum
content requirements for HHS’
redetermination decision.
• At paragraph (c)(1), we are
proposing language specifying that
HHS’ decision must address its findings
regarding the impact of any additional
data and information provided by the
State Exchange on the error(s) for which
the State Exchange requested a
redetermination.
• At paragraph (c)(2), we are
proposing language that would establish
HHS’ responsibility to give a State
Exchange information about the right to
request an appeal of the redetermination
of error findings decision in accordance
with proposed § 155.1530.
g. Appeal of Redetermination Decision
(§ 155.1530)
We are proposing to add new
§ 155.1530 to address a State Exchange’s
ability to request an appeal of the
redetermination decision. Appeals will
be administered by HHS.
• At paragraph (a), we are proposing
language regarding a State Exchange’s
right to request an appeal of a
redetermination within the deadline
prescribed in the annual program
schedule. Moreover, we are proposing
that, in the request for an appeal, the
State Exchange must indicate the
specific error(s) identified in the
redetermination decision for which the
State Exchange is requesting an appeal.
In accordance with proposed
§ 155.1530(d), which specifies that
findings would be restricted to those
errors for which a redetermination was
sought, this proposed language also
indicates that a State Exchange is
prohibited from requesting an appeal of
any error(s) that were not specified in a
State Exchange’s redetermination
request.
• At paragraph (b), we are proposing
language that conveys the appeal
entity’s review would be an on-therecord review, meaning that the appeal
entity would only review data and
information provided at the time of a
State Exchange’s redetermination
request. No additional new data or
information submitted in support of the
request for appeal would be considered.
• At paragraph (c), we are proposing
language that the appeal decision would
be issued within the deadline
prescribed in the annual program
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schedule. Again, as with the earlier time
frames set in the annual program
schedule, the time frame for appeal
allows HHS adequate time to review
information provided by the State
Exchange, assess errors, and calculate
an improper payment rate in adequate
time to publish findings in the Agency
Financial Report. We also acknowledge
that unforeseen circumstances could
result in necessary delays in the
issuance of the appeal decision for
example, public health emergencies,
natural disasters, interruptions in
business practices, or other extenuating
circumstances. Thus, we are proposing
that if these types of circumstances
necessitate the appeals entity’s need for
additional time in rendering an appeal
decision, the State Exchange would be
notified about the delay.
• At paragraph (d), we are proposing
the content of the appeal decision.
• At paragraph (d)(1), we are
proposing that the appeal decision
would include the final disposition of
the on-the-record review and that
findings would be restricted to those
error(s) for which an appeal was sought.
• At paragraph (d)(2), we are
proposing that the appeal decision
would include the estimated improper
payment rate for the State Exchange.
• At paragraph (e), we are proposing
that upon completion of the review and
the closure of all appeals, HHS would
issue to each individual State Exchange,
a report containing the error findings
and the estimated improper payment
rate for their respective program. That
report will not be made public. The
estimated improper payment rates for
each State Exchange will be used to
estimate an aggregate improper payment
rate across all State Exchanges. That
aggregate rate will be published in the
agency’s Annual Financial Report.
h. Corrective Action Plan (§ 155.1535)
We propose to add new § 155.1535 to
address the scenario in which a State
Exchange’s improper payment rate for a
given benefit year, in HHS’s reasonable
discretion, necessitates a CAP to correct
the causes of any payment errors. Our
goal is to lay out a set of minimum
requirements in future rulemaking,
using the standards provided under
Appendix C to OMB Circular No. A–
123, to support State Exchanges in
satisfying the requirement of
developing, implementing, and
monitoring a CAP. Otherwise, State
Exchanges should have the flexibility to
conduct these activities in a manner that
is tailored to their specific needs,
including any standard practices,
policies and procedures, or business
needs. We also anticipate that there
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would be collaboration required
between HHS and the State Exchange to
ensure the effectiveness of any CAP, and
we underscore the importance of
maintaining open lines of
communication on significant CAPrelated updates. As needed, a State
Exchange should be prepared to consult
with HHS and provide timely responses
to any requests for clarification or
additional information regarding the
CAP.
As we gather additional information
and data, and observe trends based on
experience with implementing the
SEIPM program, we will detail CAP
parameters or requirements in future
rulemaking. We note, as well, that the
first improper payment report would
not be released until November 2025 at
the earliest, and so the first SEIPM
program CAP likely would not be due
until early 2026.
• At paragraph (a), we propose that,
depending on a State Exchange’s error
rate for a given benefit year, we may
require the State Exchange to develop
and submit a CAP to HHS to correct
errors resulting in improper payments.
In future rulemaking, we may define a
threshold error rate, dollar amount, or
other scenarios that could necessitate a
CAP. We do not, however, anticipate
that these standards would deviate
significantly from the standards of other
improper payment measurement
programs, such as the standards under
the Medicaid and CHIP Payment Error
Rate Measurement (PERM) program.
• At paragraph (b), we propose that
Appendix C to OMB Circular No. A–123
would serve as a minimum set of
guidelines to any State Exchange that is
developing a CAP. The State Exchange
otherwise has broad discretion to utilize
a format tailored to its specific needs, so
long as it can demonstrate that the CAP
is effectively and timely correcting error
causes.
• At paragraph (c), we propose that a
State Exchange would be required to
develop an implementation schedule to
accompany its CAP, and implement any
CAP initiatives in accordance with that
schedule. In conjunction with
completing CAP initiatives timely, a
State Exchange would be required to
regularly evaluate whether those
initiatives are effective at correcting
errors identified. It is critical that the
State Exchange maintains regular
communications with HHS of any
evaluation findings, particularly for any
CAP initiatives that are not correcting
errors. In this situation a State Exchange
may need to revise or discontinue these
initiatives, or develop new ones.
• At paragraph (d), we propose the
recourse HHS has in the event that a
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State Exchange that is required to
submit a CAP fails to timely do so by
stating that HHS may take actions
consistent with § 155.1540.
i. Failure To Comply (§ 155.1540)
We propose to add new § 155.1540
that would address failures to comply
with SEIPM requirements. At paragraph
(a), we propose that HHS would have
discretion to address failures of
compliance with audit data submission
and CAP requirements contained in
subpart P, consistent with authorities
HHS possesses under title I of the ACA
or any other Federal law.
Based on experiences with other audit
programs, HHS is of the view that
without measures to ensure State
Exchanges’ compliance with SEIPM
requirements, the audit program could
easily become frustrated and inefficient,
needlessly burdensome to the
government and wasteful of government
funds and resources, as well as
ineffective to detect and prevent
improper payments of APTC in State
Exchanges. HHS finds that such failures
would undermine or prohibit HHS’s
efficient administration of Exchange
activities, including the administration
of APTC. For this reason, we propose
that if a State Exchange fails to
substantially comply with the data
collection requirements or the CAP
provisions contained in subpart P, HHS
may implement measures or procedures
in relation to the State Exchange that
HHS determines are appropriate to
secure compliance with data collection
and CAP provisions contained in
subpart P of this part, and to detect,
prevent, or reduce abuses in the
administration of APTC under title I of
the ACA, so long as such actions are
within HHS’s authorities under title I of
the ACA or any other Federal law.
The ACA grants HHS broad discretion
to ensure the effective and efficient
administration of Exchange activities
through audits and other authorized
means, such as those HHS proposes in
this rule to support its compliance with
the PIIA.283 Section 1313(a)(5) of the
ACA authorizes HHS to implement any
measure or procedure it determines
appropriate to reduce fraud and abuse
in the administration of title I of the
ACA, which includes the conduct of
APTC eligibility determinations and the
administration of APTCs. HHS is
considering exercising this authority to
ensure State Exchange compliance with
283 Although
proposed § 155.1540 and other rules
we propose to codify in part 155, subpart P, are
specifically intended to support compliance with
requirements under the PIIA, section 1313(a)(3) also
authorizes HHS to subject State Exchanges to
annual financial audits.
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659
SEIPM program data collection and CAP
requirements. For instance, upon a State
Exchange’s failure to substantially
comply with data collection
requirements, HHS could require the
State Exchange to provide on-site access
to required data and Exchange
personnel capable of displaying
requested data directly to HHS
personnel or contractors.284 If a State
Exchange failed to substantially comply
with requirements under an existing
CAP, HHS could require the State
Exchange to revise the CAP and its
related implementation plan to contain
revised or additional requirements
specifically designed to address the
State Exchange’s compliance failures
and ensure the State Exchange’s future
compliance with CAP requirements. We
seek comment on these measures and
invite suggestions for other measures
HHS might undertake in relation to
State Exchanges to incentivize
compliance with data collection and
CAP requirements (or cure noncompliance) and to ensure the efficient
administration of APTCs.
We note that if the proposed SEIPM
program requirements are finalized,
HHS does not anticipate broad or willful
noncompliance with data collection and
CAP requirements by State Exchanges.
Rather, we expect that HHS and State
Exchanges would continue to work
collaboratively to ensure the accuracy
and integrity of APTC eligibility
determinations and payments during
SEIPM audits. Where a State Exchange’s
compliance failure is due to
impediments outside of the Exchange’s
control or due to its need for technical
assistance, HHS would provide such
technical assistance and, when
appropriate, could grant reasonable
accommodations (such as additional
time to submit data or implement
elements of a CAP), in order to provide
the State Exchange the resources and
support it needs to meet SEIPM audit
requirements. Considering the
extremely close working relationships
between HHS and State Exchanges and
their combined interests in ensuring the
integrity of APTC eligibility
determinations, HHS does not anticipate
that it would need to exercise its
authority under title I of the ACA to
impose financial penalties for
substantial noncompliance resulting
from serious or willful noncompliance
with SEIPM requirements. Rather, we
284 See, for example, section 1313(a)(2) of the
ACA (HHS may investigate the affairs of an
Exchange, may examine the properties and records
of an Exchange, and may require periodic reports
in relation to activities undertaken by an Exchange,
and an Exchange must fully cooperate in any
investigation conducted under this paragraph).
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expect that such penalties would be
necessary to address only the most
egregious situations that would amount
to serious misconduct in relation to a
State Exchange’s administration of
APTCs and its failure to comply with
audit requirements.285
We invite comment on these
proposals.
E. Part 156—Health Insurance Issuer
Standards Under the Affordable Care
Act, Including Standards Related to
Exchanges
1. FFE and SBE–FP User Fee Rates for
the 2023 Benefit Year (§ 156.50)
Section 1311(d)(5)(A) of the ACA
permits an Exchange to charge
assessments or user fees on participating
health insurance issuers as a means of
generating funding to support its
operations. If a state does not elect to
operate an Exchange or does not have an
approved Exchange, section 1321(c)(1)
of the ACA directs HHS to operate an
Exchange within the state. Accordingly,
in § 156.50(c), we specified that a
participating issuer offering a plan
through an FFE or SBE–FP must remit
a user fee to HHS each month that is
equal to the product of the annual user
fee rate specified in the annual HHS
notice of benefit and payment
parameters for FFEs and SBE–FPs for
the applicable benefit year and the
monthly premium charged by the issuer
for each policy where enrollment is
through an FFE or SBE–FP.
OMB Circular No. A–25 established
federal policy regarding user fees; it
specifies that a user fee charge will be
assessed against each identifiable
recipient of special benefits derived
from federal activities beyond those
received by the general public.
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a. FFE User Fee Rates for the 2023
Benefit Year
Activities performed by the federal
government that do not provide issuers
participating in an FFE with a special
benefit are not covered by the FFE user
fee. As in benefit years 2014 through
2022, issuers seeking to participate in an
FFE in the 2023 benefit year will receive
two special benefits not available to the
general public: (1) The certification of
their plans as QHPs; and (2) the ability
to sell health insurance coverage
through an FFE to individuals
determined eligible for enrollment in a
QHP. For the 2023 benefit year, issuers
285 See, for example, section 1313(a)(4) of the
ACA (in such cases, the Secretary may rescind from
payments due to the State an amount not to exceed
one percent of such payments until corrective
actions are taken by the State and determined to be
adequate by the Secretary).
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participating in an FFE will receive
special benefits from the following
federal activities:
• Provision of consumer assistance
tools;
• Consumer outreach and education;
• Management of a Navigator
program;
• Regulation of agents and brokers;
• Eligibility determinations;
• Enrollment processes; and
• Certification processes for QHPs
(including ongoing compliance
verification, recertification, and
decertification).
To provide additional transparency
into HHS’ user fee calculation, we set
forth below the costs, premium, and
enrollment projections that went into
calculating the proposed 2023 FFE user
fee rates based on the best available data
at the time of this proposed rulemaking,
to the extent that none of this
information is considered proprietary
for issuers or confidential for the federal
government. For the 2023 benefit year,
we anticipate that spending on
consumer outreach and education,
eligibility determinations, and
enrollment process activities will
increase by approximately $140 million
above the 2022 benefit year level. We
anticipate spending on consumer
assistance tools, management of a
Navigator program, regulation of agents
and brokers, and certification of QHPs
activities will be similar to what was
estimated for the 2022 benefit year. We
do not anticipate any new services or
contracts will fall under the FFE user
fees for the 2023 benefit year.
Additionally, we considered a range
of premium and enrollment projections
in setting the proposed 2023 benefit
year FFE user fee rates.286 The weighted
average premium projections that we
considered ranged from $618 to $625
per month. The annual enrollment
percentage change projections that we
considered ranged from ¥1 percent to
2 percent. We took a number of factors
into consideration in choosing which
premium and enrollment projections
should inform the proposed 2023 FFE
user fee rates. The assumption that the
enhanced premium tax credit subsidies
in section 9661 of the ARP will expire
after the 2022 benefit year significantly
influenced our development of the 2023
enrollment and premium projections.287
We expect the expiration of this
provision of the ARP to revert
enrollment and premium projections to
286 We used the most recent projections from the
Congressional Budget Office, the Office of
Management and Budget, the Office of the Actuary,
and the Office of Financial Management.
287 Public Law 117–2.
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the pre-ARP level observed in the 2020
benefit year. Our 2023 enrollment
estimates also account for the 2021
benefit year transition (and projected
transitions through the 2023 benefit
year) of states from FFEs or SBE–FPs to
State Exchanges, as well as the
enrollment impacts of section 1332 state
innovation waivers. We project that
2023 benefit year premiums will
generally increase at the rate of medical
inflation after expiration of the
enhanced premium tax credit subsidies
in section 9661 of the ARP. After
considering the range of costs, premium
and enrollment projections, we propose
a 2023 user fee rate that will not result
in a substantial increase to consumer
premiums from prior years, and that
also ensures adequate funding for
federal Exchange operations.
As such, based on estimated costs,
enrollment, and premiums for the 2023
benefit year, we propose a 2023 benefit
year user fee rate for all participating
FFE issuers of 2.75 percent of total
monthly premiums. This is the same
user fee rate that we established for the
2022 benefit year.288 We seek comment
on this proposal.
b. SBE–FP User Fee Rates for the 2023
Benefit Year
As discussed above, OMB Circular
No. A–25 established federal policy
regarding user fees, and specified that a
user charge will be assessed against
each identifiable recipient for special
benefits derived from federal activities
beyond those received by the general
public. SBE–FPs enter into a Federal
platform agreement with HHS to
leverage the systems established for the
FFEs to perform certain Exchange
functions, and to enhance efficiency and
coordination between state and federal
programs. Accordingly, in
§ 156.50(c)(2), we specified that an
issuer offering a plan through an SBE–
FP must remit a user fee to HHS, in the
timeframe and manner established by
HHS, equal to the product of the
monthly user fee rate specified in the
annual HHS notice of benefit and
payment parameters for the applicable
benefit year and the monthly premium
charged by the issuer for each policy
where enrollment is through an SBE–
FP, unless the SBE–FP and HHS agree
on an alternative mechanism to collect
the funds from the SBE–FP or state
instead of direct collection from SBE–FP
issuers.
The benefits provided to issuers in
SBE–FPs by the federal government
include use of the federal Exchange
288 Part 3 of the 2022 Payment Notice (86 FR
53412).
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information technology and call center
infrastructure used in connection with
eligibility determinations for enrollment
in QHPs and other applicable state
health subsidy programs, as defined at
section 1413(e) of the ACA, and QHP
enrollment functions under 45 CFR part
155, subpart E. The user fee rate for
SBE–FPs is calculated based on the
proportion of user fee eligible FFE costs
that are associated with the FFE
information technology infrastructure,
the consumer call center infrastructure,
and eligibility and enrollment services,
and allocating a share of those costs to
issuers in the relevant SBE–FPs. To
calculate the proposed SBE–FP rates for
the 2023 benefit year, we used the same
assumptions on contract costs,
enrollment, and premiums as the
proposed FFE user fee rates. We
calculated the SBE–FP user fee rate
based on the proportion of all FFE
functions that are also conducted for
SBE–FPs. The final SBE–FP user fee rate
for the 2022 benefit year of 2.25 percent
of premiums was based on HHS’
calculation of the percent of costs of the
total FFE functions utilized by SBE–
FPs—the costs associated with the
information technology, call center
infrastructure, and eligibility
determinations for enrollment in QHPs
and other applicable state health
subsidy programs, which we estimate to
be approximately 80 percent. Based on
this methodology, we propose to charge
issuers offering QHPs through an SBE–
FP a user fee rate of 2.25 percent of the
monthly premium charged by the issuer
for each policy under plans offered
through an SBE–FP for the 2023 benefit
year. This is the same user fee rate that
we established for the 2022 benefit year.
We seek comment on this proposal.
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2. User Fees for FFE–DE and SBE–FP–
DE States
Consistent with the removal of
§ 155.221(j) and the repeal of the
Exchange DE option in part 3 of the
2022 Payment Notice,289 we propose a
technical correction to remove from
§ 156.50 all references to the Exchange
DE option and cross-references to
§ 155.221(j). In that rule, we also
finalized the repeal of the
accompanying user fee rate for FFE–DE
and SBE–FP–DE states for 2023;
however, HHS inadvertently did not
amend the accompanying regulatory
289 86 FR 53412 at 53424–53429, 53445. We also
clarified that the repeal of the Exchange DE option
is specific to removing the Exchange DE option
codified at § 155.221(j) and the accompanying FFE–
DE and SBE–FP–DE user fees, and that the other
federal requirements applicable to the FFE DE
Pathways, as outlined in §§ 155.220, 155.221, and
156.1230, remain intact. See 86 FR at 53427.
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text in § 156.50 related to the Exchange
DE option user fees.290 As such, we
propose to make conforming changes to
§ 156.50(c) and (d) to remove all
references to the Exchange DE option
and § 155.221(j). Specifically, we
propose to remove § 156.50(c)(3), and
amend §§ 156.50(d)(1); (d)(2)(i)(A) and
(B); (d)(2)(ii); (d)(2)(iii)(B); (d)(3); (d)(4);
(d)(6); and (d)(7) to remove the
references to the Exchange DE option.
We seek comment on these proposed
technical amendments.
3. State Selection of EHB-Benchmark
Plan for Plan Years Beginning on or
After January 1, 2020 (§ 156.111)
a. States’ EHB-Benchmark Plan Options
At § 156.111(a), we allow a state to
modify its EHB-benchmark plan by: (1)
Selecting the EHB-benchmark plan that
another state used for PY 2017; (2)
replacing one or more EHB categories of
benefits in its EHB-benchmark plan
used for PY 2017 with the same
categories of benefits from another
state’s EHB-benchmark plan used for PY
2017; or (3) otherwise selecting a set of
benefits that would become the state’s
EHB-benchmark plan. In implementing
this section, we stated in the 2019
Payment Notice that we would propose
EHB-benchmark plan submission
deadlines in the HHS annual Notice of
Benefit and Payment Parameters.
Since we finalized that rule, we have
set an early-May deadline for the
submission of EHB-benchmark plans by
states for each year from PY 2021–
2024.291 We believe that requiring these
submissions in the first week of May
that is two years before the effective
date of the new EHB-benchmark plan
has worked well. The feedback received
from states that have submitted new
EHB-benchmark plans indicates that
this timeframe provides the states with
enough time to prepare EHB-benchmark
submissions. It also provides CMS with
sufficient time to review and respond to
these submissions in advance of issuers
needing to make changes to plan design
to conform with EHB changes.
Thus, we do not believe it is
necessary to continue proposing
deadlines for EHB-benchmark
submissions under § 156.111 in each
annual Notice of Benefit and Payment
Parameters. We believe that it is in the
interest of states and issuers that we
formalize a consistent, permanent
annual deadline in early-May for EHB290 86
FR at 53429.
PY 2021, the deadline was May 6, 2019
(see 84 FR at 17534); for PY 2022, it was May 8,
2020 (84 FR at 17534); for PY 2023, it was May 7,
2021 (85 FR at 29226); for PY 2024 it is May 6, 2022
(86 FR at 24232).
291 For
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661
benchmark submissions. Accordingly,
we propose that the first Wednesday in
May that is two years before the
effective date of the new EHBbenchmark plan to be the deadline for
states to submit the required documents
for the state’s EHB-benchmark plan
selection for that PY. For example,
under this proposal, the deadline for PY
2025 would be May 3, 2023, and the
deadline for PY 2026 would be May 4,
2024. We propose corresponding edits
to § 156.111(d) and (e) to reflect this
proposed deadline.
If finalized, this proposed deadline
would obviate the need to propose
deadlines in future annual Notices of
Benefit and Payment Parameters. We
invite comment on this approach,
including whether there are any
unforeseen consequences to establishing
this perpetual deadline.
We again emphasize that this would
be a firm deadline, and that states
should optimally have one of their
points of contact who has been
predesignated to use the EHB Plan
Management Community reach out to us
using the EHB Plan Management
Community well in advance of the
deadline with any questions. Although
not a requirement, we recommend states
submit applications at least 30 days
prior to the submission deadline to
ensure completion of their documents
by the proposed deadline. We also
remind states that they must complete
the required public comment period and
submit a complete application by the
deadline. We seek comment on the
proposed deadline.
b. Annual Reporting of State-Required
Benefits
In the 2021 Payment Notice, we
amended § 156.111(d) and added
paragraph (f) to require states to
annually notify HHS in a form and
manner specified by HHS, and by a date
determined by HHS, of any staterequired benefits applicable to QHPs in
the individual or small group market
that are considered to be ‘‘in addition to
EHB’’ in accordance with § 155.170(a)(3)
and any benefits the state has identified
as not in addition to EHB and not
subject to defrayal, describing the basis
for the state’s determination.
Under this requirement, a state’s
submission must describe all benefits
requirements under state mandates
applicable to QHPs in the individual or
small group market that were imposed
on or before December 31, 2011, and
that were not withdrawn or otherwise
no longer effective before December 31,
2011, as well as all benefits
requirements under state mandates that
were imposed any time after December
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31, 2011, applicable to the individual or
small group market. The state’s report is
also required to describe whether any of
the state benefit requirements in the
report were amended or repealed after
December 31, 2011. Information in the
state’s report is required to be accurate
as of the day that is at least 60 days prior
to the annual reporting submission
deadline set by HHS.
Pursuant to § 156.111(d)(2), if the
state does not notify HHS of its required
benefits considered to be in addition to
EHB by the annual reporting submission
deadline, or does not do so in the form
and manner specified by HHS, HHS will
identify which benefits are in addition
to EHB for the state for the applicable
PY.
In the 2021 Payment Notice, we
finalized July 1, 2021 as the first
deadline for states to submit annual
reports to HHS. Additionally, in the
2022 Payment Notice, HHS finalized
July 1, 2022 as the deadline for states to
submit to HHS their annual reports for
the second year of annual reporting.
However, we simultaneously
announced our intent to exercise
enforcement discretion with regard to
the first annual reporting submission
deadline of July 1, 2021 due to delays
in finalizing the reporting templates that
states are required to use for their
submissions, delays in issuing
additional technical assistance on
defrayal, and the added burden of the
COVID–19 PHE on states. Pursuant to
this enforcement posture, we explained
that we would not take enforcement
action against states that do not submit
an annual report in 2021. Rather, we
would begin enforcing the annual
reporting requirement on July 1, 2022.
Since finalizing the annual reporting
requirement in the 2021 Payment
Notice, we have received consistent
feedback from states and stakeholders
restating the concerns raised by the
majority of public comments on the
annual reporting requirement in the
2021 and 2022 Payment Notices.
Although we received some comments
agreeing that this policy is important to
ensure states are defraying state benefit
requirements consistently, most
commenters objected to the policy as
unnecessary, burdensome on states, and
without adequate justification. Several
commenters explained that, contrary to
HHS’ concerns expressed in the 2021
and 2022 Payment Notices, states are
already regularly making careful
assessments about whether their state
benefit requirements are in addition to
EHB and are doing so in accordance
with federal requirements. Commenters
opposing the reporting policy as
unnecessary also stated that existing
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regulations already establish robust
requirements for states and issuers to
follow when a state benefit requirement
is in addition to EHB and requires
defrayal, including performing
actuarially sound analyses of costs
associated with state benefit
requirements in addition to EHB when
calculating APTCs. Commenters noted
that HHS already has existing authority
to investigate states that are not
complying with defrayal requirements
and that, as such, imposing a reporting
requirement on states is not necessary
for federal oversight purposes. Other
commenters expressed concern about
the lack of transparency around the
annual reporting and review process,
requesting that HHS delay the reporting
requirement until HHS provides further
clarification and releases additional
guidance clarifying its defrayal policies.
We have reassessed the value of the
annual reporting policy in light of these
comments and other stakeholder
feedback and believe it is important to
explore whether there may be ways to
achieve compliance with the defrayal
policy without imposing a requirement
on states to submit detailed annual
reports on state-required benefits. We
therefore propose to eliminate the
requirement at § 156.111(d) and (f) to
require states to annually notify HHS of
any state-required benefits applicable to
QHPs in the individual or small group
market that are considered to be ‘‘in
addition to EHB’’ and any benefits the
state has identified as not in addition to
EHB and not subject to defrayal. We also
propose to revise the section heading to
§ 156.111 to reflect the proposed
removal of the annual reporting
requirements such that it would instead
read, ‘‘State selection of EHBbenchmark plan for PYs beginning on or
after January 1, 2020.’’
Under this proposal, we would
continue to engage in technical
assistance with states to help ensure
state understanding of when a statebenefit requirement is in addition to
EHB and requires defrayal. We also
intend to provide additional written
technical assistance and outreach to
clarify the defrayal policy more
generally and to provide states with a
more precise understanding of how
HHS analyzes and expects states to
analyze whether a state-required benefit
is in addition to EHB pursuant to
§ 155.170. We believe this approach
would still effectively promote state
compliance with the defrayal
requirement in the interim as we
reassess whether or when an annual
reporting policy may be warranted.
Although this proposal would relieve
states of the annual reporting
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requirements, it would not pend or
otherwise impact the defrayal
requirements under section
1311(d)(3)(B) of the ACA, as
implemented at § 155.170. Under this
proposal, states remain responsible for
making payments to defray the cost of
additional required benefits and issuers
are still responsible for quantifying the
cost of these benefits and reporting the
cost to the state. We also note that the
obligation for a state to defray the cost
of QHP coverage of state-required
benefits in addition to EHB is an
independent statutory requirement from
the annual reporting policy finalized at
§ 156.111(d) and (f).
We solicit comment on this proposal,
including on whether we should retain
the reporting requirement or make it
voluntary.
4. Provision of EHB (§ 156.115)
In the 2019 Payment Notice, we
finalized flexibility through which
states may opt to permit issuers to
substitute benefits between EHB
categories. In the preamble to that rule,
we stated that this option would
promote greater flexibility, consumer
choice, and plan innovation through
coverage and plan design options.
Under this policy, a state must notify
HHS if will permit issuers to substitute
benefits between EHB categories by the
deadlines specified by HHS in future
Payment Notices.
To date, no state has ever notified
HHS that it would permit issuers to
substitute benefits between EHB
categories. To our knowledge, no state
has ever even approached HHS to
discuss the merits of allowing this
flexibility. In addition, we have received
feedback from consumer advocates that
the potential for between-category
substitution could be particularly
harmful to people living with chronic
conditions and disabilities. Given that
this policy has never been utilized, it
has not promoted greater flexibility,
consumer choice, or plan innovation
through coverage and plan design
options as intended. Rather, HHS is of
the view that it may only create
potential harm for consumers with
chronic conditions and disabilities.
Accordingly, whatever theoretical
flexibility this policy could have
afforded to states, such untapped
flexibility is not justified given the
potential negative effects on consumers.
Thus, we propose to withdraw this
flexibility by amending § 156.115 to no
longer allow states to permit issuers to
substitute benefits between EHB
categories.
In the event we do not finalize this
proposal to eliminate the state option
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for between-category substitution, we
propose to publish in guidance future
deadlines for states to notify HHS that
they wish to permit issuers to substitute
benefits between EHB categories. We
believe that it is in the interest of states
and issuers that we establish a static,
permanent annual deadline for such
notifications. Accordingly, consistent
with the deadline proposed for state
submission of EHB-benchmark plans,
we propose the first Wednesday in May
to be the deadline for states to submit
notifications to HHS that they wish to
permit issuers to substitute benefits
between EHB categories for the PY that
is 2 years before the PY that the state
wishes to permit. For example, under
this alternate proposal, the deadline for
issuers to notify HHS that they wish to
permit issuers to substitute benefits
between EHB categories for PY 2025
would be May 3, 2023; and the deadline
for PY 2026 would be May 4, 2024.
States wishing to make such an election
must continue to do so via the EHB Plan
Management Community. For
additional discussion of this proposed
deadline, see the preamble to § 156.111.
We seek comment on these proposals.
5. Prohibition on Discrimination
(§ 156.125)
If the proposed nondiscrimination
protections are finalized at § 156.200(e)
that would explicitly prohibit
discrimination based on sexual
orientation and gender identity;
§ 156.125(b) would accordingly require
issuers providing EHB to comply with
such nondiscrimination requirements.
Specifically, § 156.125(b) states that an
issuer providing EHB must comply with
the requirements of § 156.200(e), which
currently states that a QHP issuer must
not, with respect to its QHP,
discriminate on the basis of race, color,
national origin, disability, age, or sex.
Elsewhere in this rule we propose to
amend § 156.200(e) to prohibit
discrimination based on sexual
orientation and gender identity. HHS
previously codified such
nondiscrimination protections at
§ 156.200(e), simultaneously requiring
that issuers providing EHB comply with
such requirements by virtue of the
cross-reference in § 156.125(b) to
§ 156.200(e). However, amendments
made in 2020 to § 156.200(e) removed
any reference to sexual orientation and
gender identity. If the proposals at
§ 156.200(e) are finalized, issuers
providing EHB would again be required
under § 156.125(b) to comply with
nondiscrimination protections in
§ 156.200(e) that prohibit discrimination
on the basis of sexual orientation and
gender identity.
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In the March 27, 2012 Exchange
Standards final rule, we finalized
§ 156.200(e) to also prohibit
discrimination based on sexual
orientation and gender identity.292 In
the February 2013 ‘‘Patient Protection
and Affordable Care Act; Standards
Related to Essential Health Benefits,
Actuarial Value, and Accreditation;
Final Rule’’ (EHB final rule), we
finalized at § 156.125 that the
nondiscrimination requirements in
§ 156.200 also apply to all issuers
required to provide coverage of EHB,
thereby prohibiting discrimination
based on factors such as sexual
orientation and gender identity.293 In
the 2020 section 1557 final rule, HHS
revised certain CMS regulations,
including § 156.200(e), by removing
sexual orientation and gender identity
as bases of discrimination subject to the
CMS regulations’ nondiscrimination
protections.294 As a result, § 156.200(e)
currently prohibits a QHP issuer from
discriminating on the basis of race,
color, national origin, disability, age, or
sex with respect to its QHP, but does not
reference sexual orientation or gender
identity.
CMS possesses statutory authority
independent of section 1557 of the ACA
to prohibit discrimination in the small
group and individual markets pursuant
to the authority to define EHB at section
1302(b) of the ACA.295 The statute
specifies that in defining EHB the
Secretary must take into account the
health care needs of diverse segments of
the population, including women,
children, persons with disabilities, and
other groups. The EHB requirements
apply to non-grandfathered health
insurance coverage in the individual
and small group markets under section
2707(a) of the PHS Act. CMS has the
authority to interpret and implement
these provisions under its general
rulemaking authorities in sections
1321(a)(1)(B) and (D) of the ACA and
section 2792 of the PHS Act. Pursuant
to those authorities, HHS finalized in
the EHB final rule that § 156.125
prohibits benefit discrimination on the
grounds articulated by Congress in
section 1302(b)(4) of the ACA, as well
as those in § 156.200(e), which at the
time included race, color, national
origin, disability, age, sex, gender
identity, and sexual orientation. It is
under that same exercise of authority
here that § 156.125 would again prohibit
FR 18310 (March 27, 2012).
FR 12834 (February 25, 2013).
294 85 FR 37160 (June 19, 2020); See id. at 37218–
21 (the 2020 section 1557 final rule revised the
following CMS regulations: 45 CFR 147.104,
155.120, 155.220, 156.200, 156.1230).
295 85 FR 37218–21 (June 19, 2020).
663
discrimination on the basis of sexual
orientation and gender identity if the
proposed changes to include such
factors in the nondiscrimination
protections at § 156.200(e) are finalized.
Sections 1302(b) and 1321(a)(1)(B) and
(D) of the ACA and section 2707(a) and
2792 of the PHS Act are the same
authorities CMS relies upon for
implementation of existing
nondiscrimination protections at
§ 156.125. Utilizing these same
authorities to again prohibit
discrimination based on sexual
orientation and gender identity at
§ 156.125 by cross-reference to the
nondiscrimination protections at
§ 156.200(e) would be consistent with
the authority CMS relies upon for the
existing protections at § 156.125 that
prohibit discrimination on the basis of
race, color, national origin, disability,
age, or sex by cross-reference to
§ 156.200(e). We believe such
protections are warranted in light of the
existing trends in health care
discrimination and are necessary to
better address barriers to health equity
for LGBTQI+ individuals.
A more in-depth discussion of these
developments and other factors
considered in proposing amendments to
CMS nondiscrimination protections is
included earlier in the preamble to
§ 147.104 under section III.B.1.b. of this
preamble. For brevity, we refer back to
§ 147.104 under section III.B.1.b. of the
preamble rather than restating the issues
here.
We seek comment on this proposal.
a. Refine EHB Nondiscrimination Policy
for Health Plan Designs (§ 156.125)
We propose refining the EHB
nondiscrimination policy and propose a
clear regulatory framework for entities
that are required to comply with EHB
nondiscrimination policy. This
proposed refinement would not only
ensure consistent application of EHB
nondiscrimination policy but would
also better safeguard consumers who
depend on nondiscrimination
protections.
Under § 156.125(a) an issuer does not
provide EHB ‘‘if its benefit design, or
the implementation of its benefit design,
discriminates based on an individual’s
age, expected length of life, present or
predicted disability, degree of medical
dependency, quality of life, or other
health conditions.’’ 296 Section
292 77
293 78
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296 ACA section 1302(b)(4) prohibits
discrimination based on ‘‘age, disability, or
expected length of life’’ and requires that benefits
not be subject to denial based on ‘‘age or expected
length of life, present or predicted disability, degree
of medical dependency, or quality of life.’’
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156.125(b) provides that issuers must
also comply with § 156.200(e) which
states that ‘‘a QHP issuer must not, with
respect to its QHP, discriminate on the
basis of race, color, national origin,
disability, age, or sex.’’ 297 Section
156.110(d) states that an EHB
benchmark plan may not include
discriminatory benefit design that
contravenes § 156.125. In the 2016
Payment Notice, we provided examples
of potentially discriminatory practices,
and in the 2017 Payment Notice we
noted that we would consider providing
further guidance regarding
discriminatory benefit designs in the
future.298
First, we propose revisions to
§ 156.125.The proposed revisions are
intended to ensure that benefit designs,
and particularly benefit limitations and
plan coverage requirements are based on
clinical evidence. Specifically, we
propose that a nondiscriminatory
benefit design that provides EHB is one
that is clinically based, that incorporates
evidence-based guidelines into coverage
and programmatic decisions and relies
on current and relevant peer-reviewed
medical journal article(s), practice
guidelines, recommendations from
reputable governing bodies, or similar
sources. Uniformity of applying this
policy will ensure that enrollees are able
to access covered benefits fairly,
regardless of the coverage or issuer they
choose. Although this proposal
specifically applies to issuers that are
required to provide EHB, we expect that
states and other entities will also find
this standard illustrative and helpful
when, for example, conducting form
review, issuing guidance, and drafting
bills for mandated benefits.
Furthermore, because providing a
nondiscriminatory benefit design is a
prerequisite to issuers fulfilling EHB
requirements, we would expect that
issuer questions and concerns regarding
whether a particular benefit design may
be discriminatory would be addressed
the same way as other EHB issues—by
issuers working primarily and
cooperatively with states, where
applicable. While states are generally
297 45 CFR 156.200(e) states that a QHP issuer
may not discriminate based on ‘‘race, color,
national origin, disability, age, or sex.’’
298 80 FR 10750 (Feb. 27, 2015). The examples of
potentially discriminatory practices were: (1)
Attempting to circumvent coverage of medically
necessary benefits by labeling the benefit as a
‘‘pediatric service,’’ thereby excluding adults; (2)
refusing to cover a single-tablet drug regimen or
extended release product that is customarily
prescribed and is just as effective as a multi-tablet
regimen, absent an appropriate reason for such
refusal; and (3) placing most or all drugs that treat
a specific condition on the highest cost tiers; 81 FR
12244.
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the primary enforcers of EHB
requirements, CMS will be available to
assist states with their enforcement
efforts by providing relevant technical
assistance, available data, research, or
other information. CMS will continue to
monitor issuer compliance with EHB
nondiscrimination requirements and
states’ oversight and enforcement
activities to discern whether additional
CMS assistance, policy changes, or
rulemaking is necessary.
Under this proposal, unscientific 299
evidence, disreputable sources, and
other bases or justifications that lack the
support of relevant, clinically based
evidence would be an unacceptable
basis upon which to dispute a claim that
an issuer’s benefit design is
discriminatory. Examples of peerreviewed medical journals that we
would generally consider reputable for
purposes of disputing a discriminatory
benefit design claim include the Journal
of the American Medical Association
(JAMA), published by the American
Medical Association; Anesthesia,
published by the Association of
Anesthetists; Pediatrics, published by
the American Academy of Pediatrics;
Physical Therapy and Rehabilitation
Journal, published by the American
Physical Therapy Association; the New
England Journal of Medicine (NEJM),
published by the Massachusetts Medical
Society; and the American Journal of
Psychiatry, published by the American
Psychiatric Association. We do not
propose limiting the scope of acceptable
peer-reviewed journal articles to those
authored by persons who have earned
the degree Doctor of Medicine (or M.D.).
Rather, we would consider sufficient
peer-reviewed articles authored by other
relevant, licensed health professionals,
including, for example, doctors of
osteopathy, chiropractors, optometrists,
nurses, occupational therapists,
pharmacists, and dentists.
We would not consider to be
acceptable articles that are not peerreviewed or that are written primarily
for a lay audience. For example, we
would not find relevant or consider a
WebMD article or blog acceptable, in
and of itself, even where it cites and
provides links to supporting peerreviewed journal materials. We would
also not consider sufficient a peerreviewed journal article that has not
been accepted for publication in a
reputable medical publication. For
299 See Merriam-Webster.com Dictionary, s.v.
‘‘unscientific,’’ accessed November 5, 2021, https://
www.merriam-webster.com/dictionary/unscientific
(defining ‘unscientific’ as ‘‘not based on or
exhibiting scientific knowledge or scientific
methodology: Not in accord with the principles and
methods of science’’).
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example, Health Affairs would not
provide sufficient and reliable support
for this purpose because, although it is
peer-reviewed, it is not a medical
journal.
We also believe current evidencebased practice guidelines, sometimes
called clinical guidelines, and
recommendations from reputable
governing bodies that are applicable to
be a credible source. For example, we
believe that practice guidelines from
U.S. government bodies and
government-created bodies, such as the
HHS Agency for Healthcare Research
and Quality (AHRQ) and the U.S.
Preventive Services Task Force to be
sufficient. Similarly, practice guidelines
by health professional associations such
as the American Academy of Family
Physicians, American Academy of
Pediatrics, American Society for
Reproductive Medicine, and American
Occupational Therapy Association
would be relevant and credible. We also
believe that any applicable source
representing current thinking and
subject to the previously discussed
criteria would be relevant, since
medicine is a constantly evolving field.
We seek comment on the types of
clinically based justifications and level
of clinical evidence that should be
acceptable. Specifically, we seek
comment on whether we should further
define the types of acceptable clinical
evidence.
Second, we are providing examples
that illustrate presumptively
discriminatory practices that HHS
believes amount to prohibited
discrimination. Individuals enrolled in
health plans that have discriminatory
benefit designs have been negatively
impacted by the inherent design of such
health plans. We are concerned that
individuals with significant health
needs have been discouraged from
enrolling in such health insurance
coverage altogether. Individuals may
experience substantial improvements in
health insurance coverage if the EHB
nondiscrimination policy is refined.
In addition, we explain the rationale
of why an example benefit design is
presumptively discriminatory under
§ 156.125. HHS identified these
examples as presumptively
discriminatory practices based on
clinical evidence related to each
circumstance. We believe providing
examples of presumptively
discriminatory benefit designs will
clarify EHB nondiscrimination policy
and lead to greater protections for
individuals seeking medically necessary
treatment.
These presumptively discriminatory
practice examples may point to a state’s
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benchmark plan, state law, or an issuer’s
application of a state’s benchmark plan
or law as being the source of the
discriminatory benefit design. A benefit
design that is discriminatory and
inconsistent with § 156.125 must be
cured regardless of how it originated.
Thus, for example, if a state EHBbenchmark plan has a discriminatory
benefit design, that state may issue
guidance to issuers in the state
explaining that to be compliant plans
providing benefits that are substantially
equal to the EHB-benchmark plan must
not replicate this design. Similarly, if a
state-mandated benefit has a
discriminatory benefit design, the state
may attempt to remedy this through
revising the mandate or issuing
guidance. Regardless, plans required to
provide EHB would need to alter the
benefit design or justify their approach
with clinical evidence when designing
plans that meet EHB standards. We seek
comment on whether there are any
unforeseen barriers in the ability to
remedy inconsistencies with this
refined EHB nondiscrimination policy.
In ensuring that benefit designs are
not discriminatory, issuers should also
consider the method that EHB are
delivered and not inadvertently
discriminate based on the service
delivery model. Accessibility to EHB
delivered virtually has significantly
increased during the COVID–19 PHE as
enrollees had limited options for inperson health care visits. We note that
some issuers have designed health plans
that deliver services virtually with no
copay compared to in-person health
care services with a copay. This type of
health plan design could inadvertently
incentivize enrollees to access EHB in a
certain delivery method. Although this
approach may not be a discriminatory
practice pursuant to § 156.125, such a
health plan design could influence
whether an enrollee seeks medicallynecessary in-person care due to the
variation in the amount of copayment,
potentially leading to adverse health
outcomes. We intend to monitor the
issue and remind issuers that while we
encourage expanded use of EHB
virtually, it should be done in a
nondiscriminatory manner.
The following is a non-exhaustive list
of examples of presumptively
discriminatory benefit designs that
address some of the issues that we have
seen most frequently.
Examples: Discrimination Based on Age
1. Limitation on Hearing Aid Coverage
Based on Age
a. Background: The National Institute
on Deafness and Other Communication
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Disorders (NIDCD) defines a hearing aid
as a small electronic device that you
wear in or behind the ear. It makes some
sounds louder so that a person with
hearing loss can listen, communicate,
and participate more fully in daily
activities.300 The FDA defines a hearing
aid as ‘‘any wearable instrument or
device designed for, offered for the
purpose of, or represented as aiding
persons with or compensating for,
impaired hearing.’’ 301
b. Circumstance: We note that some
states have included age limits in their
benefit mandates that require coverage
for hearing aids by specifying in the
mandate that such coverage applies only
to enrollees in a certain age group. For
example, a state has required hearing
aid coverage for enrollees only up to age
21 with certain cost-sharing conditions.
c. Rationale: Individuals can
experience hearing loss at any stage of
life, and therefore the limitation in
coverage would impact an individual in
a different age group who has impaired
hearing. Neither the FDA definition of
hearing aid nor NIDCD specifies an age
when individuals need hearing aids.
However, the definitions explain that a
hearing aid is for ‘‘a person with hearing
loss’’ and as ‘‘aiding persons with or
compensating for, impaired hearing.’’
Access to hearing aids can positively
affect an individual’s communication
abilities, quality of life, social
participation, and health.302
d. Conclusion: Age limits, when
applied to services that have been found
clinically indicated for all ages, are
presumed to be discriminatory under
§ 156.125. Therefore, limiting coverage
of hearing aids that are medically
necessary to enrollees based on age
presumptively conflicts with the
prohibition under § 156.125 against
discriminatory health plan design. For
example, it would be arbitrary and
discriminatory to limit a hearing aid to
a subset of individuals such as enrollees
who are 6 years of age and younger
since there may be some older enrollees
for whom a hearing aid is medically
necessary.303
300 National Institute on Deafness and Other
Communication Disorders FAQ on Hearing Aids:
https://www.nidcd.nih.gov/health/hearingaids#hearingaid_01.
301 21 CFR 801.420.
302 National Academies of Sciences, Engineering,
and Medicine. 2016. Hearing Health Care for
Adults: Priorities for Improving Access and
Affordability. Washington, DC: The National
Academies Press. https://doi.org/10.17226/23446.
303 In the 2016 Payment Notice (which finalized
as proposed), we cautioned ‘‘both issuers and States
that age limits are discriminatory when applied to
services that have been found clinically effective at
all ages. For example, it would be arbitrary to limit
a hearing aid to enrollees who are 6 years of age
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665
2. Autism Spectrum Disorder (ASD)
Coverage Limitations Based on Age
a. Background: According to the
American Psychiatric Association,
‘‘[p]eople with ASD may have
communication deficits, such as
responding inappropriately in
conversations, misreading nonverbal
interactions, or having difficulty
building friendships appropriate to their
age. In addition, people with ASD may
be overly dependent on routines, highly
sensitive to changes in their
environment, or intensely focused on
inappropriate items.’’ 304
b. Circumstance: We note that some
states have mandated coverage for the
diagnosis and treatment for ASD up to
a certain age. For example, a state has
required coverage for enrollees up to age
18 with certain cost-sharing conditions.
Similarly, some states’ benchmark plans
that cover applied behavior analysis
(ABA therapy) include age limits.
c. Rationale: The CDC recognizes the
American Psychiatric Association’s fifth
edition of the Diagnostic and Statistical
Manual of Mental Disorders (DSM–5) as
standardized criteria to help diagnose
ASD.305 Under the DSM–5 criteria,
individuals with ASD must show
symptoms from early childhood, but
may not be fully recognized until later
in life.306 We note that screening for
ASD is usually done at a young age
although an individual may not be
diagnosed until later in life. The CDC
estimates that 2.21 percent of adults in
the U.S. have ASD.307
d. Conclusion: Limiting coverage of
the diagnosis and treatment of ASD in
a plan benefit design on the basis of the
individual’s age is presumed to be
discriminatory under § 156.125.
Limiting coverage that is medically
necessary in a subset of individuals
presumptively conflicts with the
prohibition under § 156.125 against
discriminatory benefit design.
3. Age Limits for Infertility Treatment
Coverage When Treatment Is Clinically
Effective for the Age Group
a. Background: The National Center
for Health Statistics reported that 8.8
percent of couples in the U.S. have
and younger since there may be some older
enrollees for whom a hearing aid is medically
necessary.’’
304 https://www.psychiatry.org/File%20Library/
Psychiatrists/Practice/DSM/APA_DSM-5-AutismSpectrum-Disorder.pdf.
305 https://www.cdc.gov/ncbddd/autism/hcpdsm.html.
306 American Psychiatric Association. Diagnostic
and statistical manual of mental disorders. 5th ed.
Arlington, VA: American Psychiatric Association;
2013.
307 https://www.cdc.gov/ncbddd/autism/features/
adults-living-with-autism-spectrum-disorder.html.
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experienced infertility issues while 9.5
percent have received infertility services
(for example, medical assistance,
counseling, testing for the woman and
man, ovulation drugs, fallopian tube
surgery, artificial insemination, assisted
reproductive technology, and
miscarriage preventive services).308
b. Circumstance: We note that some
states have defined ‘‘infertility’’ in state
law, which impacts insurance
companies, hospitals, medical service
corporations, and health care centers
providing coverage for medically
necessary expenses of the diagnosis and
treatment of infertility. For example, a
state restricted coverage for treatment of
infertility to individuals who are
‘‘presumably healthy,’’ thus excluding
from coverage of treatment for infertility
those who are not presumably healthy.
c. Rationale: We note that an
individual’s age is an important factor
for reproductive health and
development. Fertility, especially in
women, declines with age, which makes
natural conception more unlikely as
women get older.309 However, we also
note that the mean age for individuals
experiencing their first childbirth has
increased in recent years.310 We also
understand that not all individuals
would be eligible for infertility
treatment if they are not at the stage of
development for reproduction or have
certain medical conditions. Younger
individuals, for example, who are not at
the stage of reproductive development
would reasonably not require treatment
for infertility. Older adults as well
would not need treatment for infertility,
for example women who have reached
post-menopause.
d. Conclusion: Age limits are
presumptively discriminatory when
applied to services that have been found
clinically effective in certain age groups
under § 156.125. Limiting coverage of
the treatment of infertility in a plan
benefit design based on age
presumptively conflicts with the
prohibition under § 156.125 against
discriminatory benefit design unless
clinical evidence acceptable under the
proposed refinements to § 156.125
demonstrates that such a limitation is
justifiable considering an individual’s
reproductive health and development.
We would expect an issuer to be able to
rebut a presumption that the plan’s age
308 https://www.cdc.gov/nchs/nsfg/key_statistics/
i_2015-2017.htm#infertility.
309 https://www.acog.org/womens-health/faqs/
having-a-baby-after-age-35-how-aging-affectsfertility-and-pregnancy.
310 Mean Age of Mothers is on the Rise: United
States, 2000–2014, NCHS Data Brief No. 232,
January 2016, https://www.cdc.gov/nchs/products/
databriefs/db232.htm.
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limit on coverage for treatment of
infertility is discriminatory by
demonstrating clinical evidence that
infertility treatments have low efficacy
for the excluded age groups and/or are
not clinically indicated for the excluded
age groups.
Examples: Discrimination Based on
Health Conditions
4. Limitation on Foot Care Coverage
Based on Diagnosis (Whether Diabetes
or Another Underlying Medical
Condition)
a. Background: Routine foot care
includes cutting or removing corns and
calluses; trimming, cutting, or clipping
or debriding of nails; and hygienic or
other preventive maintenance care, such
as using skin creams, cleaning and
soaking the feet.311 Although basic foot
care is part of an individual’s personal
self-care, a health care provider in
certain situations may perform routine
foot care for a patient to the degree that
is medically necessary to prevent
perpetuation of chronic conditions.
b. Circumstance: We note that some
issuers have restricted coverage for
routine foot care to individuals
diagnosed with diabetes. For example,
several issuers have limited coverage for
routine foot care to diabetes care only.
c. Rationale: The American Diabetes
Association estimates that over 10
percent of the American population has
diabetes, which costs $237 billon for
direct medical costs.312 The annual cost
of diabetic foot ulcer treatment, for
example, is significantly greater than
non-diabetic foot ulcer treatment,
estimated at $1.38 billion versus $0.13
billion.313 Although diabetes is a vast
medical expenditure in the United
States, individuals may need routine
foot care to treat other conditions
associated with metabolic, neurologic,
or peripheral vascular disease.314
d. Conclusion: Limiting coverage of
routine foot care in a health plan based
on an individual’s diagnosis, whether
for diabetes or another underlying
medical condition, is presumed to be
discriminatory under § 156.125.
Limiting coverage of routine foot care
that is medically necessary for a subset
311 Medicare Benefit Policy Manual. Routine Foot
Care. https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/Downloads/
bp102c15.pdf.
312 https://www.diabetes.org/resources/statistics/
statistics-about-diabetes.
313 Hicks CW, Selvarajah S, et al. Burden of
infected diabetic foot ulcers on hospital admissions
and costs. Ann Vasc Surg 2016;33:149–58. 10.1016/
j.avsg.2015.11.025.
314 https://wayback.archive-it.org/2744/
20191012061156/https:/www.cms.gov/Outreachand-Education/Medicare-Learning-Network-MLN/
MLNMattersArticles/Downloads/SE1113.pdf.
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of individuals with other health
conditions presumptively conflicts with
the prohibition under § 156.125 against
discriminatory benefit designs.
Examples: Discrimination Based on
Sociodemographic Factors
5. Coverage of EHB for GenderAffirming Care
a. Background: We refer to other
nondiscrimination proposed provisions
in § 156.200(e) of this rulemaking
related to protecting individuals from
discrimination based on sexual
orientation and gender identity. If the
proposed provisions in that section are
finalized, the below example will be
illustrative of a presumptively
discriminatory benefit design that
denies coverage of medically necessary
gender-affirming care on the prohibited
basis of gender identity. This example of
presumptive discrimination also aligns
with Executive Order 13988, which
stated the Administration’s policy on
preventing and combating
discrimination on the basis of gender
identity and sexual orientation.315
b. Circumstance: The American
Psychiatric Association describes
‘‘gender dysphoria’’ in transgender
individuals as an experience of
psychological distress that results from
an incongruence between one’s sex
assigned at birth and one’s gender
identity.316 HeathCare.gov notes that
many health plans have unclear terms of
coverage for transgender individuals.317
Several states’ EHB-benchmark plans
contain either no language addressing
coverage for gender dysphoria or limits
coverage for specific gender-affirming
services. Some states have updated their
benchmark plan to add specific genderaffirming care benefits while other states
prohibit discrimination based on sexual
orientation and gender identity. We also
note that issuers have published
policies 318 related to specific coverage
of gender affirming-care.
315 American Psychiatric Association. Diagnostic
and statistical manual of mental disorders. 5th ed.
Arlington, VA: American Psychiatric Association;
2013; Executive Order 13988 on Preventing and
Combating Discrimination on the Basis of Gender
Identity or Sexual Orientation, January 20, 2021, see
86 FR 7023.
316 https://www.psychiatry.org/patients-families/
gender-dysphoria/what-is-gender-dysphoria.
317 HealthCare.gov states that ‘‘many health plans
are still using exclusions such as ‘services related
to sex change’ or ‘sex reassignment surgery’ to deny
coverage to transgender people for certain health
care services. Coverage varies by state.’’ ‘‘These
transgender health insurance exclusions may be
unlawful sex discrimination.’’ https://www.Health
Care.gov/transgender-health-care/.
318 See, for example, Aetna Gender Affirming
Surgery https://www.aetna.com/cpb/medical/data/
600_699/0615.html.
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c. Rationale: As discussed in more
detail in the preamble to § 147.104(e),
transgender individuals face health and
health care disparities, and are at higher
risk for many concomitant
conditions.319 Clinical evidence
supports medically necessary gender
affirming care and demonstrates that
such coverage can significantly improve
the health and well-being of individuals
accessing medically necessary care. For
example, for individuals diagnosed with
gender dysphoria, the American
Medical Association’s Council on
Science and Public Health supports the
use of hormone therapy and supports
health care providers that prescribe
hormone therapy based on scientific
evidence or sound medical opinion.320
In addition, other professional societies
have published criteria for guidelines in
treating gender dysphoria and genderaffirming care for transgender people.321
d. Conclusion: Pursuant to §§ 156.125
and 156.200(e), as we have proposed to
amend these provisions, benefit designs
that restrict coverage of EHB due to
gender identity are presumptively
discriminatory. A health plan design,
for example, is presumed to be
discriminatory §§ 156.125 and
156.200(e) if it limits coverage of an
EHB based on gender identity in treating
gender dysphoria when clinical
evidence demonstrates that such
coverage is medically necessary to
provide gender-affirming care. For
example, excluding coverage of
medically necessary hormone therapy
for treatment of gender dysphoria where
hormone therapy is otherwise a covered
EHB is presumptively discriminatory.
319 See, for example, Lesbian, Gay, Bisexual, and
Transgender Health, Healthy People 2020, https://
www.healthypeople.gov/2020/topics-objectives/
topic/lesbian-gay-bisexual-and-transgenderhealth#:∼:text=Research%20
suggests%20that%20LGBT%20
individuals,%2C2%2C%203%20and%20suicide;
Hafeez, Hudaisa et al. ‘‘Healthcare Disparities
Among Lesbian, Gay, Bisexual, and Transgender
Youth: A Literature Review.’’ Cureus vol. 9,4 e1184.
20 Apr. 2017, doi:10.7759/cureus.1184 (https://
www.ncbi.nlm.nih.gov/pmc/articles/PMC5478215/);
Fredriksen-Goldsen KI, Kim H–J, Barkan SE,
Muraco A and Hoy-Ellis CP (2013) Health
disparities among lesbian, gay, and bisexual older
adults: Results from a population-based study.
American Journal of Public Health 103, 1802–1809;
Billy A. Caceres et al. ‘‘A Systematic Review of
Cardiovascular Disease in Sexual Minorities’’,
American Journal of Public Health 107, no. 4 (April
1, 2017): pp. e13–e21.
320 Report of the Council on Science and Public
Health, AMA. Hormone Therapies: Off-Label Uses
and unapproved Formulations (Resolution 512–A–
15). https://www.ama-assn.org/sites/ama-assn.org/
files/corp/media-browser/2016-interim-csaphreport-4.pdf.
321 World Professional Assn for Transgender
Health, Standards of Care Version 7 (2018),
available at https://www.wpath.org/publications/.
J Clin Endocrinol Metab, November 2017,
102(11):3869–3903 https://academic.oup.com/jcem.
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6. Access to Prescription Drugs for
Chronic Health Conditions: Adverse
Tiering
Adverse tiering of prescription drugs
presents unique issues different from
presumptively discriminatory benefit
designs in other categories of EHB. We
acknowledge that cost is often an
important factor in how plans and
issuers, and their pharmacy benefit
managers (PBMs) where applicable, tier
their drugs and note that plans and
issuers are permitted to use reasonable
medical management practices and
consider cost in structuring plan designs
and cost sharing. However, we clarify
that relying on cost alone is an
insufficient basis to defend an otherwise
discriminatory benefit design. An issuer
providing EHB must not discriminate in
its prescription drug tiering structure by
discouraging enrollment of individuals
with significant health needs. As
proposed in § 156.125(a), in order to not
discriminate, the issuer’s EHB
prescription drug benefit design must be
clinically based. Factors that might be
relevant to successfully demonstrating
to CMS that the prescription drug
tiering is not discriminatory would be
demonstrating that neutral principles
were used in assigning tiers to drugs
and that those principles were
consistently applied across types of
drugs, particularly as related to other
drugs in the same class (for example,
demonstrating that the issuer or PBM
weighed both cost and clinical
guidelines in setting tiers).
a. Background: QHP issuers are
allowed to structure and offer tiered
prescription drug formularies. As a
result, QHPs will have different tier
structures depending on decisions,
including on the basis of cost, that
issuers make about their formulary
structures. However, there is concern
that formulary tiers may also be
structured to discourage enrollment by
consumers with certain chronic
conditions. One approach to this, called
adverse tiering, occurs when plans
structure the formulary by assigning all
or the majority of drugs for certain
medical conditions to a high-cost
prescription drug tier.322
b. Circumstance: Individuals with
certain chronic health conditions, for
example, have reported that the majority
of their prescription drugs have been
designated as specialty drugs and
placed in the highest cost tier.
322 Jacobs, Douglas B. and Sommers, Benjamin D.
‘‘Using Drugs to Discriminate—Adverse Selection
in the Insurance Marketplace.’’ New England
Journal of Medicine. 372:399–402. 29 Jan 2015.
<https://www.nejm.org/doi/citedby/10.1056/
NEJMp1411376#t=citedby>.
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667
Individuals have also seen most or all
prescription drugs in the same
therapeutic class, used to treat their
chronic health condition, placed on the
highest cost tiers.
c. Rationale: More than half of U.S.
adults are diagnosed with a chronic
condition. In 2018, prevalence of
multiple chronic conditions was higher
among women, non-Hispanic white
adults, older adults, adults aged 18–64
enrolled in Medicaid, adults dually
eligible for Medicare and Medicaid, and
adults in rural areas.323 Adults with
certain high-cost chronic conditions
require long-term treatment to manage
their chronic health conditions. Health
benefit designs with adverse tiering may
discriminate based on an individual’s
present or predicted disability or other
health conditions in a manner
prohibited by § 156.125(a).
d. Conclusion: The 2016 Payment
Notice provides that if an issuer places
most or all drugs that treat a specific
condition on the highest cost tiers, that
such plan designs possibly discriminate
against, individuals who have those
chronic high cost conditions under
§ 156.125. We are clarifying that such
instances of adverse tiering are
presumptively discriminatory and that
issuers and PBMs assigning tiers to
drugs should weigh cost of drugs on
their formulary with clinical guidelines
for any such drugs used to treat highcost chronic health conditions to avoid
tiering such drugs in a manner that
would discriminate based on an
individual’s present or predicted
disability or other health conditions in
a manner prohibited by § 156.125(a).
In addition, we indicated in the 2014
Letter to Issuers that we will notify an
issuer when we see an indication of a
reduction in the generosity of a benefit
in some manner for subsets of
individuals that is not based on
clinically indicated, reasonable medical
management practices.324 Issuers should
expect to cover and provide sufficient
access to treatment recommendations
that have the highest degree of clinical
consensus based on available data, such
as professional clinical practice
guidelines. Placing all drugs for a high
cost chronic condition on the highest
formulary tier is a presumed
discriminatory benefit design, even
when those drugs are costly. Plans and
issuers that tier specialty drugs higher
323 Boersma P, Black LI, Ward BW. Prevalence of
Multiple Chronic Conditions Among U.S. Adults,
2018. Prev Chronic Dis 2020;17:200130. DOI: https://
dx.doi.org/10.5888/pcd17.200130.
324 Letter to Issuers on Federally-facilitated and
State Partnership Exchanges, April 5, 2013, page 15
and 2015 Letter to Issuers in the Federally
facilitated Marketplaces, March 14, 2014, page 29.
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for certain chronic conditions should
expect to demonstrate that neutral
principles were used in assigning tiers
to such drugs and that those principles
were consistently applied across types
of drugs (for example, that the issuer
weighed both cost and clinical
guidelines in setting tiers).
For example, a generic drug requiring
no special handling that is inexpensive
to obtain might be rightly placed on a
generic tier or the lowest tier whereas a
specialty drug requiring special
handling and counseling, and that is
also very costly, might be rightly placed
on specialty tier that has the highest
cost sharing. However, a generic drug or
common brand drug that does not
require special handling, counseling, or
medication management, and is not
expensive, should not be placed on a
specialty tier just because it is used to
treat a condition that is a high-cost
chronic condition. Furthermore, issuers
and PBMs should pay close attention to
any instances where all drugs to treat
chronic conditions are placed on the
highest-cost tiers.
In relation to the proposed refinement
of the nondiscrimination standard
under § 156.125, we propose that the
policy become effective 60 days after
publication of the final rule in the
Federal Register. We seek comment on
this proposed effective date.
In addition, we recognize that other
nondiscrimination and civil rights law
may apply. These laws are distinct from
the nondiscrimination requirements in
CMS regulations, and compliance with
§ 156.125 is not determinative of
compliance with any other applicable
requirements, nor is additional
enforcement precluded. Section 156.125
does not apply to the Medicaid and
CHIP programs, but a parallel provision
applies to EHB furnished by Medicaid
Alternative Benefit Plans.325 We intend
to provide additional examples and
illustrative fact patterns of benefit
designs that are discriminatory pursuant
to § 156.125 in the future, as warranted.
We seek comment on the
nondiscrimination examples in this
proposal and whether the proposed
effective date is sufficient to implement
the refined policy.
7. Publication of the 2023 Premium
Adjustment Percentage, Maximum
Annual Limitation on Cost Sharing,
Reduced Maximum Annual Limitation
on Cost Sharing and Required
Contribution Percentage in Guidance
(§ 156.130)
As established in part 2 of the 2022
Payment Notice, HHS will publish the
325 42
CFR 440.347(e).
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premium adjustment percentage, the
required contribution percentage, and
maximum annual limitations on cost
sharing and reduced maximum annual
limitation on cost sharing, in guidance
annually starting with the 2023 benefit
year. We note that these parameters are
not included in this rulemaking, as HHS
does not propose to change the
methodology for these parameters for
the 2023 benefit year and therefore,
HHS is required to publish these
parameters in guidance no later than
January 2022.
8. Levels of Coverage (Actuarial Value)
(§§ 156.140, 156.200, 156.400)
HHS proposes to change the de
minimis ranges at § 156.140(c)
beginning in PY 2023 to +2/¥2
percentage points for all individual and
small group market plans subject to the
AV requirements under the EHB
package, other than for expanded bronze
plans,326 for which HHS proposes a de
minimis range of +5/¥2. Under
§ 156.200, HHS proposes, as a condition
of QHP certification, to limit the de
minimis range to +2/0 percentage points
for individual market silver QHPs; HHS
also proposes under § 156.400 to specify
a de minimis range of +1/0 percentage
points for income-based silver CSR plan
variations.
Section 2707(a) of the PHS Act and
section 1302 of the ACA direct issuers
of non-grandfathered individual and
small group health insurance plans
(including QHPs) to ensure that these
plans adhere to the levels of coverage
specified in section 1302(d)(1) of the
ACA. A plan’s level of coverage, or
actuarial value (AV), is determined
based on its coverage of the EHB for a
standard population. Section 1302(d)(1)
of the ACA requires a bronze plan to
have an AV of 60 percent, a silver plan
to have an AV of 70 percent, a gold plan
to have an AV of 80 percent, and a
platinum plan to have an AV of 90
percent. Section 1302(d)(2) of the ACA
directs the Secretary of HHS to issue
regulations on the calculation of AV and
its application to the levels of coverage.
Section 1302(d)(3) of the ACA
authorizes the Secretary to develop
guidelines to provide for a de minimis
variation in the actuarial valuations
used in determining the level of
coverage of a plan to account for
differences in actuarial estimates.
326 Expanded bronze plans are bronze plans
currently referenced in § 156.140(c) that cover and
pay for at least one major service, other than
preventive services, before the deductible or meet
the requirements to be a high deductible health
plan within the meaning of section 223(c)(2) of the
Code.
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In the EHB Rule at § 156.140(c), we
established that the allowable de
minimis variation in the AV of a health
plan that does not result in a material
difference in the true dollar value of the
health plan was +2/¥2 percentage
points. In the 2018 Payment Notice, we
revised § 156.140(c) to permit a de
minimis variation of +5/¥2 percentage
points for bronze plans that either cover
and pay for at least one major service
other than preventive services before the
deductible or meet the requirements to
be a high deductible health plans
(HDHP) within the meaning of section
223(c)(2) of the Code. In the 2017
Market Stabilization final rule, effective
for PY 2018, we expanded the de
minimis range for standard bronze,
silver, gold, and platinum plans to +2/
¥4.327 In that final rule, we stated that
we believed that flexibility was needed
for the AV de minimis range for metal
levels to help issuers design new plans
for future PYs, thereby promoting
competition in the market.328 In
addition, we noted that changing the de
minimis range would allow more plans
to keep their cost sharing the same as
well as provide additional flexibility for
issuers to make adjustments to their
plans within the same metal level. We
stated our view that a de minimis range
of +2/¥4 percentage points provided
the flexibility necessary for issuers to
design new plans while ensuring
comparability of plans within each
metal level.
Since we finalized these de minimis
ranges in the 2018 Payment Notice and
the 2017 Market Stabilization final rule,
we have observed an increasing
percentage of bronze plans offered on
HealthCare.gov with AVs in the upper
end of the current de minimis range. In
PY 2018, 8.45 percent of all bronze
plans offered on HealthCare.gov had an
AV between 64 and 65 percent. In PYs
2019 and 2020, this number grew to
14.29 percent and 24.44 percent,
respectively. For PY 2021, 67.55 percent
of bronze plans offered on
HealthCare.gov had an AV between 64
and 65 percent. As the cost of health
care services continues to increase, we
327 We did not in that rule modify the de minimis
range for the income-based silver CSR plan
variations (the plans with an AV of 73, 87 and 94
percent) under §§ 156.400 and 156.420. The de
minimis variation for an income-based silver CSR
plan variation is a single percentage point. In the
Actuarial Value and Cost-Sharing Reductions
Bulletin (2012 Bulletin) issued on February 24,
2012, we explained why we did not intend to
require issuers to offer a silver CSR plan variation
with an AV of 70 percent; to align with this change,
we also modified the de minimis range for
expanded bronze plans from +5/¥2 to +5/¥4.
328 82 FR at 18369.
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expect more bronze plans to have an AV
of at least 64 percent in future PYs.
TABLE 10 :
. 1 VI
n·1stnbutwn
. ofB ronze Pl ans b,y A ctuana
a ue Percentage, PY 2018 -2021
0
<60%
19.41%
26.64%
16.98%
0.00%
PY
2018
2019
2020
2021
60.00 to 61.99%
61.50%
43.20%
22.64%
20.41%
During PYs 2018 through 2021, as the
percentage of bronze plans within the
upper limit of the +5/¥4 percentage
point range increases, the percentage of
TABLE 11
. n·IStr1b
PY
2018
2019
2020
2021
0
U fIOU 0
silver plans offered on HealthCare.gov
within the lower end of the current +2/
¥4 percentage point range has
remained consistent, with less than a
64.00 to 65.00%
8.45%
14.29%
24.44%
67.55%
third of silver plans having an AV
between 66 and 68 percent.
r s·11 ver Pl ans bAt
·1v1
IV c uar1a
a ue P ercen t aee, PY 2018 -2021
66.00 to 67.99%
25.65%
30.59%
26.27%
28.43%
Despite the consistency of silver plan
distribution by AV percentage, the
number of enrollees in silver plans on
HealthCare.gov within the lower end of
62.00 to 63.99%
10.64%
15.87%
35.93%
12.04%
68.00 to 69.99%
29.47%
17.59%
23.44%
34.20%
the current +2/¥4 percentage point
range has decreased each year since
2018, while the number of enrollees in
bronze plans within the upper end of
70.00 to 71.99%
44.88%
51.82%
50.28%
37.37%
the current +5/¥4 percentage point
range has increased each year since
2018.
TABLE 12: Number of HealthCare.gov Enrollees in Plans by AV Percentage,
PY 2018-2021
As the availability of and enrollment
in bronze plans within the upper end of
the current de minimis range increases
and the enrollment in silver plans
within the lower end of the current de
minimis range decreases, we believe
that it is increasingly important for
consumers to be able to distinguish the
64.00 to 64.99%
335,164
514,874
827,694
2,184,483
66.00 to 67.99%
289,230
197,918
132,939
102,878
levels of coverage between bronze plans
and silver plans and be assured that the
level of coverage of their plan
corresponds to the relevant metal tier.
We are not confident that consumers
can reliably distinguish plans that have
similar AV percentages, but
significantly different cost sharing.
68.00 to 69.99%
275,767
160,841
173,399
144,818
Despite their similar AVs, there is
generally a 10 percentage point
difference in median coinsurance per
EHB between expanded bronze and base
silver plans offered on HealthCare.gov.
The difference between copayment
amounts for expanded bronze plan and
base silver plan is also apparent.
TABLE 13: Median Pre-Deductible Copays for Standard Silver and Expanded Bronze
Pl ans on Heat
I hC are.gov, PY2021
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$25
$165
$250
Frm 00087
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Standard Silver
(66 to 72% AV)
EP05JA22.026</GPH>
Primary Care Visit
Specialist Visit
Mental Health/ Substance Use Disorder
Outpatient Office Visit
Generic Drugs
Preferred Brand Drugs
Non-Preferred Brand Drugs
Expanded Bronze
(56 to 65% AV)
$40
$90
$50
$30
$65
$35
EP05JA22.025</GPH>
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Service
$20
$60
$150
Sfmt 4725
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EP05JA22.027</GPH>
62.00 to 63.99%
481,209
511,823
1,037,700
395,175
05JAP2
EP05JA22.024</GPH>
PY
2018
2019
2020
2021
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Thus, we are no longer of the view
that a silver de minimis range of +2/¥4
percentage points ensures the
meaningful comparison of plans
between the silver and bronze levels of
coverage. However, we continue to
recognize the importance of permitting
issuers to offer expanded bronze plans
because the rationale for expanding the
upper limit of the de minimis range for
these plans to +5 still applies to the
current market: Issuers continue to
require greater flexibility for bronze
TABLE 14 :
0
PY
76.00 to 77.99%
155,725
247,467
273,623
80,624
0
20:01 Jan 04, 2022
Jkt 253001
58.00 to 59.99%
282 003
410 260
193 673
0
60.00 to 61.99%
1 192 625
952 680
568 351
450 022
62.00 to 63.99%
481,209
511,823
1 037,700
395,175
consistent with our implementation of
section 1302(d)(1) and (d)(3) of the ACA
(which defines the metal levels and de
minimis ranges). We reiterate those
statements here. Under this proposal, a
state cannot apply an AV range that
exceeds +2/¥2 percentage points,
except for under the proposed expanded
bronze range originally provided for in
§ 156.140(c).
In addition to the proposal applicable
to non-grandfathered individual and
small group market health insurance
coverage market-wide, we also propose
to amend § 156.200(b)(3) to state that,
beginning with year PY 2023, as a
requirement for certification, the
allowable variation in AV for individual
market silver QHPs would be + 2/0
percentage points. Through the
authority granted to HHS in sections
1311(c) and 1321(a) of the ACA to
establish minimum requirements for
QHP certification, we propose this
narrower de minimis range for
individual market silver QHPs in order
to maximize PTC and APTC for
subsidized enrollees. Narrowing the de
minimis range of individual market
silver QHPs would influence the
generosity of the SLCSP, the benchmark
plan used to determine an individual’s
PTC. A subsidized enrollee who has a
SLCSP that is currently below 70
percent AV would see the generosity of
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64.00 to 64.99%
335 164
514 874
827 694
2,184 483
their current SLCSP increase, likely
accompanied by a corresponding
increase in premium, resulting in an
increase in PTC. As shown in Table 12,
since 2018, enrollment in 66.00 to 69.99
percent AV silver plans has decreased
and enrollment in 62 to 64.99 percent
AV bronze plans has increased;
enrollees in such bronze plans now
outnumber enrollees in such silver
plans by more than 10 to 1. In addition,
after implementation of the ARP
enhanced financial subsidies, there are
even fewer enrollees remaining in silver
QHPs with AVs between 66.00 and
69.99 percent offered through
Exchanges that use the Federal platform.
Approximately 248,000 enrollees
remain, of which about 91,000 are
unsubsidized. By comparison,
enrollment for the income-based silver
CSR variations corresponding to the
above silver QHPs has increased to
about 4.2 million. This proposal would
reduce the cost of insurance coverage
for an increasing population of
subsidized enrollees. It would also
mitigate the net burden of the additional
cost to a decreasing population of
unsubsidized enrollees by incentivizing
healthier, subsidy-eligible enrollees to
participate in the Marketplaces.
Thus, we believe maximizing PTC for
all subsidized enrollees justifies a
narrower de minimis range on
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161,536
159,121
110,689
0
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80.00 to 81.99%
135,160
196,882
271,174
234,361
. n·1str1bution
. ofB ronze Pl an E nroII ment b1y AVP ercentaee, PY 2018 -2021
Because of this shift, and for
consistency across the metal levels,
which would help reduce potential
consumer confusion, we believe it is
appropriate to propose, starting with
PYs beginning in 2023, to change the de
minimis ranges for the standard bronze,
gold, and platinum levels of coverage
from +2/¥4 percentage points to +/¥2
percentage points. Likewise, we have
observed a similar shift in enrollment
for expanded bronze plans that
currently utilize a +5/¥4 de minimis
range. Because of this shift, and to align
with the proposal above, we also
propose, starting with PYs beginning in
2023, to change the de minimis range
for expanded bronze plans from +5/¥4
to +5/¥2.
Further, states generally remain the
primary enforcers of the requirement to
meet AV requirements, including, to the
extent required by § 156.135, the use of
the federal AV Calculator or an AV
Calculator that utilizes state-specific
data under § 156.135(e). In the 2017
Market Stabilization rule, we stated that
states are the primary enforcers of AV
requirements and can apply stricter AV
standards that are consistent with
federal law.329 We also stated that a
state cannot require issuers to design
plans that apply an AV range that is not
329 82
78.00 to 79.99%
237,202
185,302
68,308
175,056
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PY
2018
2019
2020
2021
authority under sections 1302(d)(3) and
1321(a)(1)(A) and (D) of the ACA, and
sections 2707 and 2792 of the PHS Act,
we propose changing the de minimis
range for standard silver plans.
Additionally, as shown in Tables 14
and 15, we have observed a shift in
enrollment for gold plans in 2021 and
bronze plans since 2019 within the +2/
¥4 de minimis towards the center of
the de minimis (+2/¥2).
n·IS trI bU fIOU 0 f G 0 Id Plan E nroII men th1y AVP ercen t aee, PY 2018-2021
2018
2019
2020
2021
TABLE 15
plan design to assist with innovation,
premium impact, and future impacts to
the AV Calculator methodology, to
ensure that bronze plans can continue to
be more generous than catastrophic
plans, and to ensure that HDHPs can be
offered at the bronze level. At the same
time, the 2017 Market Stabilization final
rule also noted the narrow difference in
bronze and silver QHPs and therefore, to
improve a consumer’s ability to
meaningfully compare the bronze and
silver levels of coverage, pursuant to our
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individual market silver QHPs that have
fewer enrollments each year. We solicit
comment on other cost implications the
proposal might have.
Finally, we propose changing the de
minimis variation for individual market
income-based silver CSR plan variations
from +1/¥1 to +1/0 with a proposed
revision to the definition of ‘‘De
minimis variation for a silver plan
variation’’ at § 156.400. Similar to the
+2/0 de minimis proposal for individual
market silver QHPs, this proposal would
deliver further subsidization of
premiums via increased APTC and PTC
for subsidized enrollees in the incomebased silver CSR plan variations and
increase the generosity of these plans.
While there would be an expected
increase to the premium for the CSR
plan variations as a result of the
increased generosity, it would be
substantially offset by increases to the
APTC and PTC. We do not propose edits
to the minimum AV differential in
§ 156.420(f) for silver QHPs and 73
percent income-based plan variations,
where the AVs must differ by at least 2
percentage points. We would note for
issuers that, similar to the current de
minimis ranges, standard silver QHPs
with plan AVs between 71 and 72
percent would require the
corresponding 73 percent income-based
plan variation AV to be at least 2
percentage points above the standard
plan’s AV.
We seek comment on this proposal.
9. QHP Issuer Participation Standards
(§ 156.200)
We propose to amend 45 CFR
156.200(e) such that its
nondiscrimination protections would
explicitly prohibit discrimination based
on sexual orientation and gender
identity. HHS previously codified such
nondiscrimination protections at
§ 156.200(e), but amendments made in
2020 to § 156.200(e) removed any
reference to sexual orientation and
gender identity. If finalized, this
proposal would revert § 156.200(e) to
the pre-2020 nondiscrimination
protections.
Section 156.200(e) states that a QHP
issuer must not, with respect to its QHP,
discriminate on the basis of race, color,
national origin, disability, age, or sex.
Previously, in the March 27, 2012
Exchange Standards final rule, we
finalized § 156.200(e) to also prohibit
discrimination based on sexual
orientation and gender identity.330
However, in the 2020 final rule related
to section 1557, HHS revised certain
CMS regulations, including § 156.200(e),
330 77
FR 18310 (March 27, 2012).
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by removing sexual orientation and
gender identity in § 156.200(e) as bases
of discrimination subject to the CMS
regulations’ nondiscrimination
protections.331
CMS possesses statutory authority
independent of section 1557 of the ACA
to prohibit discrimination by issuers of
QHPs. Pursuant to section 1311(c)(1)(A)
of the ACA, QHP issuers are required to
comply with applicable state laws and
regulations regarding marketing by
health insurance issuers and not employ
marketing practices or benefit designs
that will have the effect of discouraging
the enrollment of individuals with
significant health needs. CMS is
authorized to interpret and implement
this requirement, and to set additional
requirements for QHPs under its
authority to establish requirements with
respect to the offering of QHPs through
the Exchanges in section 1321(a)(1)(B)
of the ACA.332 Pursuant to this
authority to set QHP standards in
section 1321(a)(1)(B) of the ACA, HHS
finalized in the 2012 Exchange
Standards final rule requirements at
§ 156.200(e) intended to protect
enrollees and potential enrollees from
discriminatory practices, including on
the basis of sexual orientation and
gender identity. CMS proposes to
exercise that same authority here to
amend § 156.200(e) to again prohibit
QHPs from discriminating based on
sexual orientation and gender identity.
Section 1321(a)(1)(B) of the ACA is the
same authority CMS relies upon for
implementation of existing
nondiscrimination protections at
§ 156.200(e). Utilizing this same
authority to again prohibit
discrimination based on sexual
orientation and gender identity at
§ 156.200(e) would be consistent with
the authority CMS relies upon for the
existing protections at § 156.200(e) that
currently prohibit discrimination on the
basis of race, color, national origin,
disability, age, or sex. We believe such
amendments are warranted in light of
the existing trends in health care
discrimination and are necessary to
better address barriers to health equity
for LGBTQI+ individuals.
A more in-depth discussion of these
developments and other factors
considered in proposing amendments to
CMS nondiscrimination protections is
included earlier in the preamble to
§ 147.104 under section III.B.1.b. of this
preamble. For brevity, we refer readers
331 85 FR 37160 (June 19, 2020); See id. at 37218–
21 (the 2020 section 1557 final rule revised the
following CMS regulations: 45 CFR 147.104,
155.120, 155.220, 156.200, 156.1230).
332 85 FR 37218–37221 (June 19, 2020).
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back to § 147.104 under section III.B.1.b.
of the preamble, rather than restating
the issues here.
We seek comment on this proposal.
10. Standardized Options (§ 156.201)
Section 1311(c)(1) of the ACA directs
the Secretary to establish criteria for the
certification of health plans as QHPs.
Section 1321(a)(1)(B) of the ACA directs
the Secretary to issue regulations that
set standards for meeting the
requirements of title I of the ACA with
respect to, among other things, the
offering of QHPs through such
Exchanges. HHS proposes to exercise
these authorities to require issuers of
QHPs in FFEs and SBE–FPs, for PY
2023 and beyond, to offer through the
Exchange standardized QHP options at
every product network type, as
described in the definition of ‘‘product’’
at § 144.103, metal level, and
throughout every service area that they
offer non-standardized QHP options.
For example, if an issuer offers a nonstandardized gold health maintenance
organization (HMO) plan in a particular
service area, that issuer must also offer
a standardized gold HMO plan in that
same service area. HHS does not
propose to limit the number of nonstandardized QHP options that issuers
of QHPs in FFEs and SBE–FPs can offer
through the Exchange in PY 2023. As
discussed later, HHS is considering
whether for future years it would be
appropriate to limit the number of nonstandardized QHP options that issuers
of QHPs in FFEs and SBE–FPs can offer
through the Exchange.
Standardized options were first
introduced in the 2017 Payment Notice.
In the first iteration of standardized
options, HHS proposed one set of
standardized options designed to be
similar to the most popular QHPs in the
2015 individual market FFEs at the
bronze, silver, and gold metal levels.
Issuers were not required to offer
standardized options. To facilitate plan
shopping and to educate consumers
about the distinctive cost sharing
features of standardized options,
standardized options were differentially
displayed on HealthCare.gov per the
authority at § 155.205(b)(1). Specifically,
consumers had the ability to filter plan
options to view only standardized
options and received an accompanying
message explaining how standardized
options differed from non-standardized
options.
In the 2018 Payment Notice, HHS
proposed three new sets of standardized
options. The original standardized
options from the 2017 Payment Notice
were updated to reflect changes in QHP
enrollment data in 2016, to include
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SBE–FP data, and to account for state
cost sharing laws. Standardized options
were once more differentially displayed,
but this time, they were also labeled
‘‘Simple Choice’’ plans to make them
more easily distinguishable from nonstandardized options. HHS also
established display requirements for
approved web-brokers and QHP issuers
using a direct enrollment pathway to
facilitate enrollment through an FFE or
SBE–FP—including both the Classic DE
and EDE Pathways—at
§§ 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv), respectively. 333 334 Per
these requirements, these entities were
required to differentially display
standardized options in accordance
with the requirements under
§ 155.205(b)(1) in a manner consistent
with how standardized options were
displayed on HealthCare.gov, unless
HHS approved a deviation.
Standardized options were then
discontinued in the 2019 Payment
Notice, but the discontinuance was
challenged in the United States District
Court for the District of Maryland. On
March 4, 2021, the court decided City of
Columbus, et al. v. Cochran.335 The
court reviewed nine separate policies
HHS had promulgated in the 2019
Payment Notice, vacating four of them.
The court specifically vacated the
portion of the 2019 Payment Notice that
ceased HHS’s practice of designating
some plans in the FFEs as ‘‘standardized
options,’’ a policy that the 2019
Payment Notice stated was seeking to
maximize innovation by issuers in
designing and offering a wide range of
plans to consumers.336 As such, HHS
announced its intent to engage in
rulemaking under which it would
propose to resume standardized options
in time for PY 2023.337 More recently,
President Biden’s Executive Order on
Promoting Competition in the American
Economy directed HHS to implement
standardized options in order to
facilitate the plan selection process for
consumers on the Exchanges.338
The standardized options that we are
proposing are as follows: One bronze
333 See
81 FR at 94117—94118, 94148.
45 CFR 155.220(l) and 155.221(i).
335 523 F. Supp. 3d 731 (D. Md. 2021).
336 83 FR 16974—16975.
337 In part 3 of the 2022 Payment Notice final
rule, we explained that we would not be able to
fully implement those aspects of the court’s
decision regarding standardized options in time for
issuers to design plans and for Exchanges to be
prepared to certify such plans as QHPs for PY 2022,
and therefore intended to address these issues in
time for plan design and certification for PY 2023.
See 86 FR 24140, 24264.
338 Executive Order 14036 on Promoting
Competition in the American Economy, July 9,
2021, see 86 FR 36987.
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334 See
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plan, one bronze plan that meets the
requirement to have an AV up to 5
points above the 60 percent standard, as
specified in § 156.140(c) (known as an
expanded bronze plan), one standard
silver plan, one version of each of the
three income-based silver CSR plan
variations, one gold plan, and one
platinum plan. We do not propose to
require FFE and SBE–FP issuers to offer
standardized options for the Indian CSR
plan variations given that the cost
sharing parameters for these variations
are already largely standard. Further, we
do not propose to require State
Exchange issuers to offer the
standardized options in this proposal.
We also propose that FFE and SBE–FP
issuers that are already required to offer
standardized options under state action
taking place on or before January 1,
2020, such as issuers in the state of
Oregon,339 be exempt from the
standardized options requirements in
this proposal.
Additionally, in an approach similar
to that taken in the 2018 Payment
Notice, we propose two sets of
standardized options to accommodate
different states’ cost sharing laws.
Specifically, we propose that the first
set of standardized options apply to all
FFE and SBE–FP issuers, excluding
Delaware and Louisiana, and we
propose that the second set of
standardized options apply to issuers in
Delaware and Louisiana in order to
accommodate these two states’ specialty
tier prescription drug cost sharing laws.
In conjunction with our standardized
options proposal, we are considering
exercising the existing authority under
§ 155.205(b)(1) to differentially display
standardized options on
HealthCare.gov. Similarly, we are
considering resuming enforcement of
the standardized options display
requirements for approved web-brokers
and QHP issuers using a direct
enrollment pathway to facilitate
enrollment through an FFE or SBE–FP—
including both the Classic DE and EDE
Pathways—at §§ 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv), respectively. If we
were to resume enforcement of these
requirements, these entities would be
required to differentially display
standardized options beginning with the
PY 2023 open enrollment period 340 in
accordance with the requirements under
§ 155.205(b)(1) in a manner consistent
with how standardized options are
displayed on HealthCare.gov, unless
HHS approves a deviation. Any requests
339 See
Or. Admin. R. 836–053–0009.
PY 2023 OEP is scheduled from
November 1, 2022 to January 15, 2023. See 45 CFR
155.410(e)(3).
from web-brokers and QHP issuers
seeking approval for an alternate
differentiation format would be
reviewed based on whether the same or
similar level of differentiation and
clarity is being provided under the
requested deviation as is provided on
HealthCare.gov.
We continue to believe that the
differential display of standardized
options will not require significant
modification of web-broker and QHP
issuer platforms, but that such display
would provide an important service and
information for consumers seeking to
enroll in Exchange coverage. However,
consistent with the approach finalized
in the 2018 Payment Notice,341 we also
continue to recognize that system
constraints may prevent some webbrokers and QHP issuers from precisely
mirroring the HealthCare.gov display,
which is why we would continue to
allow these entities to submit a request
to deviate from the manner in which
standardized options are differentially
displayed on HealthCare.gov.
If we were to resume enforcement of
these requirements, we reaffirm that a
QHP issuer using a direct enrollment
pathway to facilitate enrollment through
an FFE or SBE–FP—including both the
Classic DE and EDE Pathways—would
only need to differentially display those
standardized options it offers.342
Additionally, we intend to provide
access to information on standardized
options to web-brokers and QHP issuers
through the Health Insurance
Marketplace Public Use Files (PUFs)
and QHP Landscape file to further
minimize burden on these entities. We
seek comment on this potential
approach to display requirements.
We are proposing this approach for
several reasons. The 2019 Payment
Notice eliminated standardized options
with the intention of maximizing
innovation and variety at a time when
the individual market was considered to
be at risk of destabilization. We believe
that current market conditions differ
significantly from the market conditions
that defined the individual market when
standardized options were eliminated.
For example, the number of issuers
offering plans on the Exchanges has
increased considerably, the number of
counties with a single issuer offering
plans through the Exchange has
decreased significantly, and the number
of plan options that consumers have
access to on the Exchanges has
increased substantially since
standardized options were discontinued
in the 2019 Payment Notice. With
340 The
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341 See
81 FR at 94118.
342 Ibid.
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increased enrollment, increased issuer
participation, decreased single issuer
counties, and increased plan options
available to consumers, we believe that
resuming standardized options at this
time can play a constructive role in
enhancing consumer experience,
increasing consumer understanding,
simplifying the plan selection process,
combatting discriminatory benefit
designs that disproportionately impact
disadvantaged populations, and
advancing health equity.
We are proposing to require issuers
offering QHPs through FFEs and SBE–
FPs to offer standardized options, as
opposed to allowing them to choose to
offer these standardized options, as was
done in the past, due in large part to the
enhanced stability of the market as well
as the consumer benefits derived from
the ability to compare the same plans
across different issuers. For example, in
the FFEs and SBE–FPs in PY 2019, there
was an enrollee-weighted average of 1.2
catastrophic plans, 7.9 bronze plans,
12.3 silver plans, 4.6 gold plans, and 1.1
platinum plans available per enrollee,
amounting to a total of 25.9 plans
available per enrollee. In the FFEs and
SBE–FPs in PY 2022, based on current
filing data, it is expected that there will
be an enrollee-weighted average of 2.7
catastrophic plans, 40.4 bronze plans,
45.3 silver plans, 19.2 gold plans, and
1.6 platinum plans available per
enrollee, amounting to a total of 106.5
plans available per enrollee. The
proliferation of choices available to
consumers on the Exchanges that makes
it more difficult to meaningfully assess
all available plan options.
The significant increase of plan
offerings available on the Exchanges
over the last several PYs highlights the
need to facilitate the plan selection
process for consumers. This is because
when consumers are faced with an
overwhelming amount of plan choices,
each with slightly different cost sharing
structures, these consumers can
experience choice paralysis. Along with
plan standardization, there are
additional ways to facilitate more
meaningful consumer choice, for
example though directly limiting the
number of allowable offerings by metal
level or the imposition of strong
meaningful difference standards. For
example, six states limit the number of
plans that issuers can offer through the
Exchanges. We believe that requiring
issuers to offer these standardized
options will play a constructive role in
facilitating the plan selection process,
and we believe it will enable consumers
to make more meaningful comparisons
between plan offerings, thus optimizing
the plan selection process. We also
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believe that given the large number of
plan offerings on the Exchanges, a
sufficiently diverse range of plan
offerings exists for consumers to
continue to select innovative plans that
meet their unique health needs. We thus
do not believe that requiring issuers to
offer standardized options will hamper
innovative plan designs, as we noted in
the preamble to the 2017 Payment
Notice.
We are proposing to require issuers in
FFEs and SBE–FPs, but not issuers in
State Exchanges to offer standardized
options for several reasons. Eight State
Exchanges already require or will
require issuers to offer standardized
options by PY 2023. Imposing
duplicative federal standardized options
requirements on issuers in State
Exchanges that already have existing
state standardized options requirements
runs counter to the aforementioned
goals of enhancing the consumer
experience, increasing consumer
understanding, simplifying the plan
selection process, combatting
discriminatory benefit designs, and
advancing health equity.
Second, we believe State Exchanges
are uniquely positioned to best
understand the nature of their
respective markets as well as the
consumers in these markets. The eight
State Exchanges that require or will
require issuers to offer standardized
options by PY 2023 have conducted
extensive stakeholder engagement in
designing standardized options that
meet the unique needs of their
respective consumers and stakeholders.
As such, we believe State Exchanges are
best positioned to design standardized
options for their respective markets. We
further believe that states that have
invested the necessary time and
resources to become State Exchanges
have done so in order to implement
innovative policies that differ from
those on the FFEs. We do not wish to
impede this innovation, so long as these
innovations comply with existing legal
requirements. However, because we
propose to impose this requirement in
the FFEs, and because the SBE–FPs use
the same platform as the FFEs, we
propose to apply the requirements
equally on FFEs and SBE–FPs. Changing
the platform to permit distinction on
this proposal between FFEs and SBE–
FPs would require a very substantial
financial and operational burden that
we believe outweighs the benefit of
permitting such a distinction.
We propose one exemption to the
above requirement for FFE and SBE–FP
issuers to offer the specific standardized
options that we propose in this rule.
Specifically, we propose that FFE and
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673
SBE–FP issuers that are subject to
existing state standardized options
requirements under state action taking
place on or before January 1, 2020, such
as issuers in the state of Oregon, be
exempt from being required to offer the
specific standardized options that we
propose in this rule. We do not wish to
impose duplicative requirements that
could conflict with these existing state
standardized options requirements and
the QHP plan designs applicable in such
states. Regardless, HHS intends to
differentially display these existing state
standardized options on the Federal
platform in the same manner as it
displays the specific standardized
options that we propose in this rule.
We also believe that requiring FFE
and SBE–FP issuers to offer
standardized options at every product
network type, metal level, and
throughout every service area that they
also offer non-standardized options will
ensure consumers have access to plans
that have greater pre-deductible
coverage, as the standardized options
included in this proposal have greater
pre-deductible coverage than most of
the most popular QHPs in the FFEs and
SBE–FPs in PY 2021. Additionally, the
fact that these plans have standardized
cost sharing parameters will enable
consumers to more meaningfully
compare other meaningful plan
attributes, such as networks,
formularies, and quality ratings during
the plan selection process, optimizing
the plan selection process.
We are not proposing standardized
options for the Indian CSR plan
variations at §§ 156.420(b)(1) and (2) for
several reasons. First, the cost sharing
parameters for the zero cost-sharing
Indian CSR plan variations are already
designated. Specifically, in the zero
cost-sharing Indian CSR plan variations,
eligible consumers do not have to pay
for any out-of-pocket costs for EHB.
Second, in the limited cost-sharing
Indian CSR plan variations, eligible
consumers also pay no out-of-pocket
costs for EHB, but only when they
receive them from an Indian health care
provider or from another provider with
a referral from an Indian health care
provider.
Similar to how we have not specified
the cost-sharing parameters for more
than one tier of in-network providers or
for out-of-network providers for the
standardized option plan designs that
we are proposing, we are proposing to
not specify the cost-sharing parameters
for EHBs received from non-Indian
health care providers for limited costsharing Indian CSR plan variations. This
is because eligible consumers will also
pay no costs for EHBs provided by
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Indian health care providers or from
another provider with a referral from an
Indian health care provider, obviating
the need to specify the cost-sharing
parameters for this type of plans.
Altogether, we believe that proposing
standardized options for the two Indian
CSR plan variations, as well as applying
the aforementioned requirements to the
two Indian CSR plan variations, would
impose duplicative requirements with
little potential benefit since the cost
sharing parameters for these plans are
already specified.
We believe that not limiting the
number of non-standardized QHPs that
issuers can offer through the FFEs and
SBE–FPs in PY 2023 will ensure that
consumers continue to have access to a
range of plans that meet their unique
health needs. Furthermore, we do not
wish to cause an excessive amount of
disruption, particularly in too
condensed a timeframe, and we do not
wish to cause an excessive number of
consumers to have their coverage under
their current plan discontinued for a
future plan year due to limits on the
number of non-standardized options.
Therefore, to address choice overload
and enhance consumer choice-making
ability, we are considering whether to
limit the number of non-standardized
QHPs that issuers can offer through the
FFEs and SBE–FPs in future PYs,
particularly in light of the significant
growth in the number of plan choices
offered.
We also believe concurrently
resuming differential display of
standardized options on HealthCare.gov
per the authority at § 155.205(b)(1) as
well as resuming enforcement of the
accompanying display requirements
applicable to approved web-brokers and
QHP issuers using a direct enrollment
pathway to facilitate enrollment through
an FFE or SBE–FP—including both the
Classic DE and EDE Pathways—at
§§ 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv), respectively, is
important considering that a steadily
increasing number of consumers are
enrolling in Exchange plans via these
pathways. In addition, it will further
streamline the plan selection and
enrollment process for Exchange
consumers, aid consumers in
distinguishing standardized options
from non-standardized options, and
enhance consumer understanding of the
benefits of standardized options, such as
having more pre-deductible coverage,
regardless of whether the consumer uses
HealthCare.gov or a non-Exchange
website.
We also note that the comments we
received in response to part 3 of the
2022 Payment Notice informed our
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decision to resume the designation of
standardized options as well as our
specific approach for doing so. We
received substantial comment from
diverse stakeholders and carefully
considered these comments. Many
commenters recommended requiring
issuers to offer standardized options and
differentially or preferentially
displaying standardized options.
Commenters explained the importance
of simplifying the complex process of
purchasing insurance and the role that
standardized options could play in that
simplification.
Specifically, commenters explained
that there is significant variation in the
cost sharing structures of nonstandardized options, much of which
cannot be identified without a detailed
analysis of benefit designs. Commenters
explained that many individuals do not
have the time, resources, or health
literacy necessary for this level of
analysis. Commenters explained that
enrollees instead typically choose plans
based on more readily available
comparison points, like premiums,
rather than factors that would be
illuminated by a more detailed
examination of plan designs, like
expected out-of-pocket costs.
Commenters further explained that
selecting a plan solely based on its
premium without taking into
consideration other attributes of its
design, such as its cost sharing
structure, deductible, or expected outof-pocket costs, can result in
unexpected costs and financial harm for
consumers.
Commenters also explained that
barriers to conducting a detailed
analysis of plan designs are particularly
pronounced for those whose resources
are already severely constrained,
including those with limited English
proficiency, those with inadequate
internet access, and those with complex
health needs. Commenters explained
that facilitating consumer
understanding and streamlining
decision-making in the plan selection
process would benefit these populations
as well as populations with
disproportionately high rates of chronic
diseases.
Commenters also explained that
standardized options could help
individuals more easily identify plans
that may have potentially
discriminatory benefit designs. These
commenters explained that
discriminatory benefit designs target
individuals with particular disabilities
or health conditions by leaving them
with substantial out-of-pocket costs.
Commenters explained that conditions
that are typically targeted, including
PO 00000
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HIV, diabetes, cancer, and mental health
conditions, disproportionately affect
individuals of color. Commenters
explained that discriminatory benefit
designs continue to violate the PPACA’s
protections for people with preexisting
conditions and its prohibition on
discrimination based on race, sex, and
disability.
All of these considerations informed
our decision to resume the designation
of standardized options as well as our
specific approach for designing and
implementing standardized options
requirements.
Regarding the methodology employed
in designing these standardized options,
similar to the approach taken in past
iterations of standardized options in the
2017 and 2018 Payment Notices, we
designed these plans to be similar to the
most popular QHPs in FFEs and SBE–
FPs in PY 2021.Several comments we
received in response to part 3 of the
2022 Payment Notice proposed rule
expressed support for continuing to use
this methodology in our approach to
standardized options. Commenters
explained that continuing to use this
methodology and designing plans to be
similar to the most popular QHPs in
FFEs and SBE–FPs would minimize the
degree of disruption when these
requirements are implemented.
We designed the proposed
standardized options to be similar to the
most popular QHPs based on an
examination of the proportion of
consumers enrolled in plans with
different cost sharing types (including
copay exempt from the deductible,
copay subject to the deductible,
coinsurance exempt from the
deductible, and coinsurance subject to
the deductible) for every benefit
category in the actuarial value calculator
(AVC) at each metal level. We chose the
cost sharing type with the majority or
plurality of enrollees. We then chose the
enrollee-weighted median values for
this cost sharing type as the copay
amount or coinsurance rate for each
benefit category before modifying these
plans to have an AV near the lower end
of the de minimis range for each metal
level to ensure the competitiveness of
these plans. Nothing in the design of
these standardized options supersedes
the obligation to cover certain benefits,
such as the preventive services required
under § 147.130, without cost sharing,
even if such benefits would also fall into
a category for which cost sharing is
specified for the standardized option.
We applied this same methodology in
selecting the deductible MOOPs for the
proposed plans at each metal level.
Specifically, we selected the enrolleeweighted median values for deductibles
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Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
and MOOPs to ensure these plans
would be similar to plans that the
majority or plurality of consumers are
already currently enrolled in.
In addition to designing the proposed
standardized options to be similar to the
enrollee-weighted medians for each
benefit category, we designed two sets
of standardized options to accommodate
applicable state cost sharing laws in
different sets of FFE and SBE–FP states.
This is similar to the approach taken the
last time standardized options were
offered. Specifically, In the 2018
Payment Notice, we designed three sets
of plans tailored to unique cost sharing
laws in different states. The second and
third sets of these standardized options
differed from the first set only to the
extent necessary to comply with state
cost sharing laws. The second set of
standardized options in the 2018
Payment Notice was designed to work
in states that: (1) Require that cost
sharing for physical therapy,
occupational therapy, and speech
therapy be no greater than the cost
sharing for primary care visits; (2) limit
the cost-sharing amount that can be
charged for a 30-day supply of
prescription drugs by tier; or (3) require
that all drug tiers carry a copayment
rather than coinsurance. The second set
of standardized options applied to
Arkansas, Delaware Iowa, Kentucky,
Louisiana, Missouri, Montana, and New
Hampshire. The third set was designed
to work in a state with maximum
deductible requirements and other cost
sharing standards. The third set of
standardized options was designed to
work in the Exchange in New Jersey,
which has since transitioned to become
a State Exchange and is thus outside the
intended scope of this rulemaking for
reasons described above.
We included several of the defining
features of the second set of
standardized options from the 2018
Payment Notice in the first set of
standardized options we are proposing
in this rulemaking. As a result, in the
first set of standardized options, there is
cost sharing parity between the primary
care visit, the speech therapy, and the
occupational and physical therapy
benefit categories. There are also copays
for all prescription drug tiers, including
the non-preferred brand and specialty
tiers, instead of coinsurance rates.
Finally, the copayment for the mental
health/substance use disorder innetwork outpatient office visit subclassification is equal to the least
restrictive level for copayments for
medical/surgical benefits in the innetwork, outpatient office visit subclassification (and copayments apply to
substantially all medical/surgical
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benefits in this sub-classification), to
ensure issuers are able to design plans
that comply with the Paul Wellstone
and Pete Domenici Mental Health Parity
and Addiction Equity Act of 2008
(MHPAEA) and its implementing
regulations.343 We propose that this first
set of standardized options apply to all
FFE and SBE–FP issuers, excluding
issuers in Delaware and Louisiana.
We included all of the defining
features of the second set of
standardized options from the 2018
Payment Notice in the second set of
standardized option plan designs we are
proposing in this rule. As a result, in
this set of standardized options, similar
to the first set of standardized options,
there is cost sharing parity between the
primary care visit, the speech therapy,
and the occupational and physical
therapy benefit categories, and there are
copays for all prescription drug tiers,
including the non-preferred brand and
specialty tiers, instead of coinsurance
rates. Finally, the copayment for the
mental health/substance use disorder
in-network outpatient office visit subclassification is equal to the least
restrictive level for copayments for
medical/surgical benefits in the innetwork, outpatient office visit subclassification (and copayments apply to
substantially all medical/surgical
benefits in this sub-classification), to
ensure issuers are able to design plans
that comply with MHPAEA and its
implementing regulations.
The feature that distinguishes the first
set of standardized options from the
second is that the second set of
standardized options have copays of
$150 or less for the specialty drug tiers
of standardized options at all metal
levels. This feature was included in the
second set of standardized options to
accommodate relevant specialty tier
prescription drug cost sharing laws in
Delaware and Louisiana. We therefore
propose that this set of standardized
options apply to issuers in these two
specific states.
The list of states for which these sets
of standardized options apply differs
slightly from the list of states for which
the sets applied in the 2018 Payment
Notice. Specifically, in the 2018
Payment Notice, the second set of
standardized options applied to
Arkansas, Delaware, Iowa, Kentucky,
Louisiana, Missouri, Montana, and New
343 In general, MHPAEA requires that the
financial requirements (such as coinsurance and
copays) and treatment limitations (such as visit
limits) imposed on mental health or substance use
disorder benefits cannot be more restrictive than the
predominant financial requirements and treatment
limitations that apply to substantially all medical/
surgical benefits in a classification.
PO 00000
Frm 00093
Fmt 4701
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675
Hampshire (with the first set applying to
the rest of the FFE and SBE–FP states),
whereas in the current proposal, we
propose that the second set of
standardized options apply only to
Delaware and Louisiana (with the first
set applying to the rest of the FFE and
SBE–FP states).
This is because we incorporated the
other two defining features of the
second set of standardized options in
the 2018 Payment Notice (that is, cost
sharing parity between the physical
therapy, occupational therapy, and
speech therapy AVC benefit categories
with the primary care visit AVC benefit
category, and all drug tiers carry a
copayment rather than coinsurance) in
both sets of standardized options in the
current proposal. We made this decision
primarily because incorporating these
two design features into the plan
designs had a negligible impact to these
plans’ AVs, and including these features
in both sets of standardized options
decreases operational complexity and
allows plan designs targeted to these
specific states. As a result, the first set
of standardized options can now be
used in Arkansas, Iowa, Kentucky,
Missouri, Montana, and New
Hampshire.
We seek comment on this proposal,
including comment on (1) requiring FFE
and SBE–FP issuers to offer
standardized options at every product
network type, metal level, and
throughout every service area that they
offer non-standardized options; (2) not
limiting the number of nonstandardized options that issuers can
offer through the Exchanges; (3) the
feasibility, advantages, and
disadvantages of gradually limiting the
number of plan options over the course
of several PYs; (4) whether standardized
options should be differentially
displayed on HealthCare.gov as well as
the best manner for doing so; (5)
whether web-brokers and issuers using
the Classic DE and EDE Pathways
should remain subject to differential
display requirements; (6) the
continuation of an exceptions process
that allows these entities to deviate from
the display of standardized options on
HealthCare.Gov; (7) exempting State
Exchange issuers from these
requirements; (8) whether these plan
designs should apply to State Exchanges
that do not use the Federal platform and
that have not implemented their own
standardized options; (9) exempting FFE
and SBE–FP issuers that are subject to
existing state standardized options
requirements under state action taking
place on or before January 1, 2020 from
being required to offer the standardized
options in this proposal; (10) the
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TKELLEY on DSK125TN23PROD with PROP2
methodology used to design these
standardized options; (11) if these
standardized options are compliant with
state cost sharing laws in FFE and SBE–
FP states; (12) the cost sharing
VerDate Sep<11>2014
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Jkt 253001
parameters and plan designs for these
standardized options; (13) how these
plans can be designed in a way that
maximizes the likelihood that plans will
be able to comply with MHPAEA; (14)
PO 00000
Frm 00094
Fmt 4701
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the policy approach for PYs 2023 and
beyond; and (15) having two sets of
standardized options (that is, a separate
set for Delaware and Louisiana).
BILLING CODE 4120–01–P
E:\FR\FM\05JAP2.SGM
05JAP2
677
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
Bronze
Actuarial Value
Deductible
Annual
Limitation on
Cost Sharing
Emergency
Room Services
Inpatient
Hospital
Services
Primary Care
Visit
Urgent Care
Specialist Visit
Mental
Health/Substance
Use Disorder
Outpatient
Office Visit
Imaging
(CT/PET Scans,
MRls)
Speech Therapy
Occupational,
Physical Therapy
Laboratory
Services
TKELLEY on DSK125TN23PROD with PROP2
X-rays and
Diagnostic
Imaging
Skilled Nursing
Facility
Outpatient
Facility Fee
(Ambulatory
Surgery Center)
Outpatient
Surgery
Physician and
Services
VerDate Sep<11>2014
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59.86%
$9,100
$9,100
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
Jkt 253001
Expanded
Bronze
64.06%
$7,500
$9,000
Standard
Silver
70.04%
$5,800
$8,900
Silver
73CSR
73.10%
$5,700
$7,200
Silver
87CSR
87.04%
$800
$3,000
Silver
94CSR
94.02%
$0
$1,700
Gold
Platinum
78.00%
$2,000
$8,700
88.00%
$0
$3,000
50%
40%
40%
30%
25%*
25%
$100*
50%
40%
40%
30%
25%*
25%
$350*
$50*
$40*
$30*
$20*
$0*
$30*
$10*
$75*
$60*
$45*
$30*
$5*
$45*
$15*
$100*
$80*
$60*
$40*
$10*
$60*
$20*
$50*
$40*
$30*
$20*
$0*
$30*
$10*
50%
40%
40%
30%
25%*
25%
$100*
$50*
$40*
$30*
$20*
$0*
$30*
$10*
$50*
$40*
$30*
$20*
$0*
$30*
$10*
50%
40%
40%
30%
25%*
25%
$30*
50%
40%
40%
30%
25%*
25%
$30*
50%
40%
40%
30%
25%*
25%
$150*
50%
40%
40%
30%
25%*
25%
$150*
50%
40%
40%
30%
25%*
25%
$150*
PO 00000
Frm 00095
Fmt 4701
Sfmt 4725
E:\FR\FM\05JAP2.SGM
05JAP2
EP05JA22.030</GPH>
TABLE 16: 2023 Standardized Options Set One (For All FFE and SBE-FP States,
Excludinl! Delaware and Louisiana)
678
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
Generic Drugs
Preferred Brand
Drugs
Non-Preferred
Brand Drugs
Specialty Drugs
Bronze
Expanded
Bronze
Standard
Silver
Silver
73CSR
Silver
87CSR
Silver
94 CSR
Gold
Platinum
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
$25*
$20*
$20*
$10*
$0*
$15*
$5*
$50
$40*
$40*
$20*
$15*
$30*
$10*
$100
$80
$80
$60
$50*
$60*
$50*
$500
$350
$350
$250
$150*
$250*
$150*
VerDate Sep<11>2014
20:01 Jan 04, 2022
Jkt 253001
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Fmt 4701
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E:\FR\FM\05JAP2.SGM
05JAP2
EP05JA22.031</GPH>
TKELLEY on DSK125TN23PROD with PROP2
*Benefit category not subject to the deductible
679
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
TABLE 17: 2023 Standardized Options Set Two (For Delaware and Louisiana)
Bronze
·. Actuarial. Value
Annual····.. •· •
59.86%
$9 100
$9,100
·. Lhnitationon .
.· Ccist Sharing
· Inpatient
·.·.Hqspital•·.·
• Services
Primary
.···. . .
C~e · •.·
Visit . •.
- ,
: ._\
UrgentCare .•i. ··
~0% \.·
..
$75;1<
Silver
Silveri
• ··
Gold
1·
•
·
.• Platinum····
87 CSR . . 94 CSR ··
· ·
··.
87.05% 94.02%• 78.02% . 88.01%
$800
$0 •
$2 000
$0•.•·
$8,700 •. $3,000 ..
$3,000
$1,800.
40%
···~0%>
30%
i25%*
25%
$100* .•...
40%
·'40%··
30%
·.·.25%*
25%
.$350*
$40*
·$lOO*.
Menti!lHealth/····. No charge
after
deductible
· Disorder • ·
Outpatient. • ..
..Office Visit
rm:aging• .· ..•·· No charge
(CTlPET
.Scans; • after
MR.Is'>. ·.... deductible
.-_, -- - --_ '\ - No charge
SpeechTheraj)y < after
deductible
No charge
Occupatioluil,
Physical•.•• .· . .· after
Theiaov
· deductible
No charge
· Lab.oratozy ..
after
Services .
deductible
x~tays and · . ·•· No charge
after
Diagnostic.
I:tnaidriit .. ·..
deductible
73 CS:R
73:01%
$4 100
$7,200 •
64 ..01% .·•·.. 70.05%
$5 800
$7 $00
$<),000>.
$8,900
··so'>/4
No charge
after
deductible
No charge
after
deductible
No charge
after
deductible
...Silver..
. . ... .
<Expande
Standar
.
d Bro:nze ·. d Silver
$20*
$60*
··.$60*··
$80*
>$80*.
.
$30*
$30*
$40*
$40*
$40* .. •·.
$20*
40%
40%
30%
i$%*
25%
$40*
$49*
$20*
,.$0* ..... ·.·
$30*
$10*
$0*
$30*
$10*.·
25%
.$'.30* ·.
25%
•$30* .•
$30*
VerDate Sep<11>2014
20:01 Jan 04, 2022
Jkt 253001
.·SQ%
,-_,
.•
··$50*•.
:,\'
•
..
.·•$50*
$40*
"
$40*/ $20*
'
',_-
•·· .:·
40%
40%
30%
25%*·>···
,0%.,··
40%
•40%
30%
25%*
PO 00000
Frm 00097
Fmt 4701
Sfmt 4725
E:\FR\FM\05JAP2.SGM
..
... •.·
50¾ .
.• ·.• 0 ·.
.. $100*• ..
_,,,
05JAP2
EP05JA22.032</GPH>
TKELLEY on DSK125TN23PROD with PROP2
· Substance Use
680
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
·.Sktlle~· Nur$irig·
No charge
•50%
..
,\,
Facility..
· after
deductible
No charge
50% •
Qµtpatierit
after
.F~¢i1ityFee .
(Ambufatof .... deductible
Sur e · Center
No charge
Outpatient
50r<>\··
. Surgery · . . ·••·· • .• •·. after
·•Physician l¼i;td \ . . deductible
Services ·.....
...
•
No charge
.· $25*···
• ~rt~rlc timgs • after
deductible
$50 .\ .•
No charge
Pr~t~iJd Brand . after
D ..
.·. · mgs ..
deductible
,,,
No charge
Non-Preferred< . ·
after
Srand Diugs •.•
deductible
,_<,:,
. $150. ·•
No charge
~pecialty D:rugs · after
deductible
*Benefit category not subject to the deductible
\'
,' ,,
.
,'
'
'
''
11. Network Adequacy (§ 156.230)
We propose to adopt FFE QHP
certification standards that would
ensure that QHP enrollees would have
sufficient access to providers. HHS is of
the view that strong network adequacy
standards are necessary to achieve
greater equity in health care and
enhance consumer access to quality,
affordable care through the Exchanges.
We have engaged and received feedback
from numerous stakeholders
representing diverse perspectives in
developing these policy proposals.
TKELLEY on DSK125TN23PROD with PROP2
30%
25'Y<1*•
25%
$150~
40%
.40%
30%
25%."'
25%
$150*>
40%
40%
30%
25%11<
$20*
..$20*·•.····.·.
$10*
$40*
$40*
$80
$125
25%
• $150.*.
$Q*.··
$15*
$5* . ·.·. .
$20*
$5*
$30*
.•.$SO.·•·
$60
$10*
$60*
$50* \ ·.
$125
$100
$20*.
$100
$75.*
.
,:'
·•no*
',
BILLING CODE 4120–01–C
a. Background of Network Adequacy
Standards
Section 1311(c)(1)(B) of the ACA
directs HHS to establish by regulation
certification criteria for QHPs, including
criteria that require QHPs to ensure a
sufficient choice of providers (in a
manner consistent with applicable
provisions under section 2702(c) of the
PHS Act), and provide information to
current and prospective enrollees on the
availability of in-network and out-ofnetwork providers. Federal network
adequacy standards were first detailed
in the Patient Protection and Affordable
Care Act; Establishment of Exchanges
and Qualified Health Plans; Exchange
Standards for Employers 344 and
344 https://www.federalregister.gov/documents/
2012/03/27/2012-6125/patient-protection-andaffordable-care-act-establishment-of-exchangesand-qualified-health-plans.
VerDate Sep<11>2014
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20:01 Jan 04, 2022
Jkt 253001
codified at § 156.230. HHS seeks to
ensure that quantitative, prospective
network adequacy reviews 345 occur for
QHPs offered through the FFEs so that
enrollees have reasonable, timely access
to health care providers.
The FFEs conducted network
adequacy reviews of time and distance
standards for QHPs for PYs 2015–2017.
The Market Stabilization 346 final rule
deferred reviews of network adequacy
for QHPs to states that HHS determined
to have a sufficient network adequacy
review process, an approach that was
extended by the 2019 Payment
Notice.347 Specifically, CMS deferred to
states that possessed sufficient authority
to enforce standards that were at least
equal to the reasonable access standard
defined in § 156.230 and that had the
means to assess the adequacy of plans’
provider networks. For PYs 2018–2022,
HHS determined that all states had
sufficient legal authority and means to
assess the adequacy of plans’ provider
networks. On March 4, 2021, as noted
previously, the United States District
Court for the District of Maryland
decided City of Columbus, et al. v.
345 Prospective network adequacy reviews would
occur during the QHP certification process.
346 https://www.federalregister.gov/documents/
2017/04/18/2017-07712/patient-protection-andaffordable-care-act-market-stabilization.
347 https://www.federalregister.gov/documents/
2018/04/17/2018-07355/patient-protection-andaffordable-care-act-hhs-notice-of-benefit-andpayment-parameters-for-2019.
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Fmt 4701
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Cochran.348 One of the policies the
court vacated was the 2019 Payment
Notice’s elimination of the Federal
Government’s reviews of the network
adequacy of QHPs and plans seeking
QHP certification to be offered through
the FFEs.
As such, we announced in Parts 2 and
3 of the 2022 Payment Notice final rules
our intent to undertake rulemaking to
establish network adequacy standards,
beginning in this proposed rule for PY
2023.
b. FFE Network Adequacy Reviews
For the QHP certification cycle for
PYs beginning in 2023, HHS proposes to
evaluate the adequacy of provider
networks of QHPs offered through the
FFEs, or of plans seeking certification as
FFE QHPs, except for FFEs in certain
states. HHS would not evaluate QHP
network adequacy in FFE states
performing plan management functions
that elect to perform their own reviews
of plans seeking QHP certification in
their state, so long as the state applies
and enforces quantitative network
adequacy standards that are at least as
stringent as the federal network
adequacy standards established for
QHPs under § 156.230, and that network
adequacy reviews are conducted prior to
QHP certification. States performing
plan management functions are states
served by an FFE where the state has
agreed to assume primary responsibility
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for reviewing issuer-submitted QHP
certification material and making
certification recommendations to HHS.
We seek comment on this proposal.
c. FFE Network Adequacy Standards
Beginning With PY 2023
i. Network Adequacy Standards
Applicable to Plans That Use a Provider
Network
Section 1311(c)(1)(B) of the ACA
directs HHS to establish criteria for the
certification of health plan as QHPs,
which includes the requirement that
QHPs must ‘‘ensure a sufficient choice
of providers.’’ HHS codified QHP
network adequacy requirements under
§ 156.230(a)(2). In the 2012 Exchange
final rule, we established the minimum
network adequacy criteria that health
and dental plans must meet to be
certified as QHPs at § 156.230. This
regulation provided that an issuer of a
QHP that uses a provider network must
maintain a network that is sufficient in
number and types of providers,
including providers that specialize in
mental health and substance use
disorder services, to ensure that all
services will be accessible to enrollees
without unreasonable delay. In the 2016
Payment Notice, we modified
§ 156.230(a) in part to specify that
network adequacy requirements only
apply to QHPs that use a provider
network, and that a provider network
includes only providers that are
contracted as in-network.
Later in this section of the preamble,
we propose to refine the FFE’s QHP
certification standards regarding the
adequacy of plans’ provider networks by
imposing time and distance standards,
appointment wait time standards, and
standards related to tiered networks.
ii. Time and Distance Standards
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For the certification cycle for PYs
beginning in 2023, HHS proposes to
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adopt for QHPs offered through the
FFEs time and distance standards that
HHS would use to assess whether FFE
QHPs (or QHP candidates) fulfill
network adequacy standards applicable
to plans that use provider networks.
The proposed provider specialty lists
for time and distance standards for PY
2023 are informed by prior HHS
network adequacy requirements,
consultation with stakeholders, and
other federal and state health care
programs, such as Medicare Advantage
and Medicaid. The provider specialty
lists cover more provider types than
previously evaluated under FFE
standards so that QHP networks will be
more robust, comprehensive, and
responsive to QHP enrollees’ needs. The
proposed provider specialty lists are
generally consistent with standards
used for plans in the Medicare
Advantage program. For brevity
purposes, when discussing provider
types for network adequacy, we will use
the term ‘‘behavioral health’’ to
encompass mental health and substance
use disorders.
HHS proposes reviewing additional
specialties for time and distance,
beyond those included by Medicare
Advantage, that are necessary to meet
the health care needs of QHP enrollees
since Medicare Advantage and the FFEs
serve different enrollee populations.
The additional specialties proposed are:
Emergency medicine, outpatient clinical
behavioral health, pediatric primary
care, and urgent care. Individual market
health insurance has typically provided
coverage of these specialties, as well.
We are aware of issues faced by
consumers where in-network emergency
physicians are in limited supply or not
available at in-network hospitals. To
provide proactive consumer protections,
and, similar to the No Surprises Act,
incentivize contracting between
emergency medicine physicians and
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681
issuers to increase enrollee access to innetwork providers, we propose adding
emergency medicine physicians to our
provider specialty list for time and
distance standards. Behavioral health
services are similarly critical to meeting
QHP enrollees’ health needs, so we also
propose to add outpatient clinical
behavioral health to our provider
specialty list for time and distance
standards. Since QHP enrollees include
dependents under the age of 18, we
propose adding pediatric primary care
as a specialty. We further propose to
include urgent care facilities in our time
and distance standards because they
help meet QHP enrollees time-sensitive
health care needs when primary care is
unavailable and the issues do not
require emergency intervention. We
seek to ensure the QHP enrollees have
access to a variety of behavioral health
facilities at the residential and inpatient
levels of care. Consequently, we are also
proposing to broaden the inpatient
psychiatry facility specialty to be
inpatient or residential behavioral
health facility.
HHS proposes that time and distance
standards would be calculated at the
county level and vary by county
designation. CMS would use a county
type designation method that is based
upon the population size and density
parameters of individual counties, in
alignment with Medicare Advantage.
The time and distance standards would
apply to the provider specialty lists
contained in Tables 18 and 19. To count
towards meeting the time and distance
standards, individual and facility
providers listed on Tables 18 and 19
would have to be appropriately
licensed, accredited, or certified to
provide services in their state, as
applicable, and would need to have inperson services available.
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TABLE 18: Proposed Individual Provider Specialty List for Time an d Distance Standards
Individual Provider Specialty Types
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Allergy and Immunology
Cardiology
Cardiothoracic Surgery
Chirooractor
Dental
Dermatology
Emergency Medicine
Endocrinolo!!V
ENT/Otolarvngology
Gastroenterology
General Surgery
Gvnecolo!!V, OB/GYN
Infectious Diseases
Neohrology
Neurology
Neurosurgerv
Occupational Therapy
Oncology - Medical, Surcical
Oncology - Radiation
Oohthalmology
Orthopedic Surgery
Outpatient Clinical Behavioral Health (Licensed,
accredited, or certified orofessionals)
Physical Medicine and Rehabilitation
Phvsical Theraov
Plastic Sumery
Podiatrv
Primarv Care - Adult
Primarv Care - Pediatric
Psychiatry
Pulmonology
Rheumatology
Sneech Theraov
Urology
Vascular Surgery
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TABLE 19: Pro osed Facili
683
List for Time and Distance Standards
Facility Specialty Types
Acute Inpatient Hospitals (Must have Emergency services
available 24/7
Cardiac Catheteri:zation Services
Cardiac S
Critical Care Services - Intensive Care Units ICU
Diagnostic Radiology (Free-standing; hospital outpatient;
ambulato health facilities with Dia nostic Radio lo
Inpatient or Residential Behavioral Health Facility
Services
Mammo
The county-specific time and distance
parameters that plans would be required
to meet would be detailed in future
guidance. These parameters would be
informed by industry standards.
Issuers that are unable to meet the
specified standards would be able to
submit a justification to account for
variances. HHS would review such
justifications to determine whether the
variance(s) is/are reasonable based on
circumstances, such as the local
availability of providers and variables
reflected in local patterns of care, and
whether offering the plan through the
FFE would be in the interest of qualified
individuals and employers. We propose
to codify the network adequacy
justification process in regulation at
§ 156.230.
HHS seeks comment on this proposal,
including on the specific parameters for
time and distance standards, and
flexibilities that may be needed in rural
areas when there are provider or plan
shortages. In particular, HHS seeks
comment on the parameters that should
apply with respect to behavioral health
providers in order to ensure adequate
access to these services. HHS also seeks
comment on the specialty list to which
time and distance standards would
apply and whether HHS should
establish time and distance standards
for additional specialties in future PYs.
iii. Appointment Wait Times
For the certification cycle for PYs
beginning in 2023, HHS proposes to
adopt appointment wait time standards
to assess whether QHPs offered through
the FFEs fulfill network adequacy
standards applicable to plans that use a
provider network. We are proposing a
short list of critical service categories for
which appointment wait time standards
List for A
would be assessed. The proposed
provider specialty list for appointment
wait time standards for PY 2023 is
included below and is informed by prior
federal network adequacy requirements
and consultation with stakeholders,
including issuers and other federal and
state health care programs, such as
Medicare Advantage and Medicaid.
The appointment wait time standards
would apply to medical QHPs. For
stand-alone dental plans (SADPs), only
the dental provider specialty within the
Specialty Care (Non-Urgent) category of
appointment wait time standards would
apply. To count towards meeting
appointment wait time standards,
providers listed in Table 20 must be
appropriately licensed, accredited, or
certified to practice in their state, as
applicable, and must have in-person
services available.
ointment Wait Time Standards
Provider/Facility Type
Behavioral Health Services
p
The specific appointment wait time
parameters that plans would be required
to meet, including specifications for
individual provider and facility types,
would be detailed in future guidance.
These parameters would be informed by
industry standards. Issuers applying for
FFE QHP certification would need to
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attest that they meet these standards as
part of the certification process. HHS
proposes to conduct post-certification
reviews to monitor compliance with
these standards. These compliance
reviews would occur in response to
access to care complaints or through
random sampling.
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Similar to the proposed justification
process for time and distance standards,
issuers that are unable to meet the
appointment wait time standards would
be able to submit a justification to
account for variances. HHS would
review such justifications to determine
whether the variance(s) is/are
reasonable based on circumstances,
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such as the local availability of
providers and variables reflected in
local patterns of care, and whether
offering the plan through the FFE would
be in the interest of qualified
individuals and employers. We propose
to codify the network adequacy
justification process in regulation at
§ 156.230.
HHS seeks comment on this proposal,
including on the specialty list to which
appointment wait time standards would
apply, specific parameters for
appointment wait time standards, and
other ideas to strengthen network
adequacy policy in future years, such as
provider-enrollee ratios, provider
demographics, and accessibility of
services and facilities. We also seek
comment on possible methods to collect
and analyze claims data to inform future
network adequacy standards and other
aspects of QHP certification that impact
health equity.
iv. Tiered Networks
HHS proposes that, for plans that use
tiered networks, to count toward the
issuer’s satisfaction of the network
adequacy standards, providers must be
contracted within the network tier that
results in the lowest cost-sharing
obligation. For example, a QHP issuer
cannot use providers contracted with
their PPO network when certifying a
plan using their HMO network, if use of
PPO network providers would result in
higher cost-sharing obligations for HMO
plan enrollees. For plans with two
network tiers (for example, participating
providers and preferred providers), such
as many PPOs, where cost sharing is
lower for preferred providers, only
preferred providers would be counted
towards network adequacy standards.
We propose to codify the network
tiering requirement for network
adequacy in regulation at § 156.230.
Network adequacy standards are
tailored to ensure QHP enrollees have
reasonable access to a sufficient number
and type of providers to meet their
health care needs. HHS is aware of
instances in which issuers have
attempted to satisfy QHP certification
requirements related to networks, such
as ECP standards, using providers that
would require enrollees to pay higher
cost sharing. We seek to ensure that
QHP enrollees have access to networks
with sufficient numbers and types of
providers without the imposition of a
higher cost-sharing requirement.
HHS seeks comment on this proposal.
v. Telehealth Services
HHS proposes to require all issuers
seeking certification of plans to be
offered as QHPs through the FFEs to
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submit information about whether
network providers offer telehealth
services. HHS proposes that this
requirement would be applicable
beginning with the QHP certification
cycle for PY 2023. We believe this
information could be relevant to HHS’
analysis of whether a QHP meets
network adequacy standards. For PY
2023, this data would be for
informational purposes; it would be
intended to help inform future
development of telehealth standards
and would not be displayed to
consumers. Issuers should not construe
this proposal to mean that telehealth
services could be counted in place of inperson service access for the purpose of
network adequacy standards.
As further explained in the ICRs and
Regulatory Impact Analysis sections for
network adequacy, we believe the
telehealth data collection would create
some additional burden for issuers who
do not already have this data. The
estimated burden for the telehealth data
collection is included as part of the total
burden for completing and submitting
the ECP/NA template and is detailed in
the ICRs and Regulatory Impact
Analysis sections for network adequacy.
We believe that the potential benefits of
obtaining this information and using it
to inform future network adequacy
standards are in the best interests of
both QHP enrollees and QHP issuers. As
such, we anticipate that the additional
burden would be mitigated by the
expected benefits.
HHS seeks comment on this proposal,
including comments on how HHS might
incorporate telehealth availability into
network adequacy standards in future
PYs. We specifically seek comment on
whether HHS should consider aligning
the FFE network adequacy standards
with Medicare Advantage’s telehealth
approach in which issuers are offered a
credit towards meeting time and
distance standards.
vi. Solicitation of Comments—
Unintended Impacts of Stronger
Network Adequacy Standards
HHS is of the view that the network
adequacy standards we propose in this
rule are reasonable, necessary, and
appropriate to ensure that QHPs
enrollees have the access to the innetwork providers the ACA requires.
We acknowledge, however, that there is
some risk that stronger network
adequacy standards could be leveraged
to create an uneven playing field in
network agreement negotiations that
could result in higher health care costs
for consumers. We are also interested in
exploring rules and policies that would
promote competition, taking into
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consideration the interests of issuers,
providers, and consumers by limiting
the potential that network adequacy
standards may be used by parties to
network agreements as leverage to
obtain more favorable contract terms,
leading to higher health care costs for
consumers.
Strengthening network adequacy
standards may increase the market
power of some providers and
inadvertently increase the cost of health
care—for issuers, and, consequently, for
enrollees. Some issuers seek to
counteract these costs by incentivizing
enrollees to seek care from lower-cost
providers. However, some providers
impose contractual steering restrictions
in contracts with issuers. For example,
where only one hospital is available to
an issuer to meet the network adequacy
standard, that hospital could charge
higher prices without the threat of being
excluded from the issuer’s network.
Such a price increase may be avoided if
the issuer can include the hospital in its
network, while giving incentives to its
enrollees to use a more cost-effective
alternative. This procompetitive option
to ‘‘steer’’ patients away from high-cost
providers can be precluded by the
provider imposing contractual steering
restrictions on issuers. A rule that
circumscribes such steering restrictions
may prevent providers from exploiting
network adequacy standards to charge
higher prices. We seek comment on the
feasibility and parameters of such a rule
and other solutions that would balance
bargaining power between issuers and
providers in a way that protects the
interests of consumers.
The risk that a network adequacy
standard may inadvertently empower a
provider to charge higher prices is
particularly problematic when the
provider is part of a multi-provider
hospital system and that system
contracts on an all-or-nothing basis with
issuers. An all-or-nothing contract is
one that requires that an issuer contract
with all facilities in a health system if
the issuer wants to include any of the
health system’s facilities in its plan
networks. When a multi-provider
hospital system requires an all-ornothing provision in its network
agreements with issuers, issuers may be
required to contract with the entire
system in order to meet the network
adequacy standard, and this may
compel issuers to pay higher prices
across the system, or else fail to meet
the network adequacy standard. For this
reason, we are interested in exploring
how limiting ‘‘all-or-nothing’’
contracting provisions in payer
contracts might counteract the potential
for stronger network adequacy standards
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to increase health care costs and seek
comment on this topic. We understand
that provider organizations typically use
all-or-nothing provisions to leverage the
status of their facilities that plan
networks must have to satisfy network
adequacy standards. These
circumstances may compel the issuer to
pay higher prices across the system. We
are interested in understanding how this
practice affects enrollees’ use of and
access to in-network care and how it
may contribute to the cost of care. We
seek comment on these issues,
including comments on ways that HHS
could help stem the use of all-ornothing contracts that may drive up
health care costs for consumers; how
issuers can use provider networks to
drive costs down; and what impact allor-nothing contracting has on enrollees,
plans, providers, and the market.
vii. Solicitation of Comments—Network
Adequacy in State Exchanges
HHS is interested in learning more
about network adequacy in states with
State Exchanges. HHS understands that
State Exchanges have a mix of network
adequacy policies in place, and that
about 75 percent of those states have at
least one quantitative standard for time
and distance, appointment wait times,
or both. While the new proposed
network adequacy standards for QHP
issuers in FFEs differ from those in State
Exchanges, HHS has not been inclined
to propose additional regulations that
specifically target network adequacy
reviews for QHP issuers in State
Exchanges, and we are not inclined to
propose regulating network adequacy
for State Exchanges at this time.
However, we are considering whether
there is a need for greater alignment in
FFE and State Exchange network
adequacy standards.
Starting in PY 2022, there will be 21
State Exchanges. We are concerned that
there is no preferred network adequacy
model that is shared among states,
which indicates that there is no general
agreement among states or Exchanges
regarding what exactly constitutes an
adequate network. Moreover, the
proliferation of narrower networks in
recent years presents a number of
potential consumer protection concerns,
including whether a narrow network
has sufficient capacity to serve plan
enrollees, or whether providers may be
too geographically dispersed to be
reasonably accessible. We are aware of
the NAIC Health Benefit Plan Network
Access and Adequacy Model Act,349
which includes recommendations for
349 https://content.naic.org/sites/default/files/
inline-files/MDL-074.pdf.
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network adequacy standards to which
states could hold their issuers
accountable, and requires submission of
access plans. Since there has been
limited uptake of the full Model Act by
states, there remains a lack of
consistency in network adequacy
standards among states and Exchanges.
HHS seeks comment on whether these
conditions necessitate a more
coordinated, national approach to
network adequacy rules across all
Exchanges that is suited to address
contemporary conditions in the health
care markets. For example, we seek
comment on whether in future PYs,
HHS should consider imposing network
adequacy rules in FFEs and State
Exchanges that would be intended to
increase the standardization of network
adequacy across the Exchanges.
Moreover, we seek comment on specific
measures to support such
standardization to ensure that all
Exchange enrollees can access the
benefits and services under their plans
as required by the ACA. We further seek
comments that identify specific gaps in
provider accessibility that exist under
disparate State Exchange network
adequacy standards that might be
addressed through greater federal
regulation of network adequacy
standards across all Exchanges.
12. Essential Community Providers
(§ 156.235)
Essential community providers (ECPs)
include providers that serve
predominantly low-income and
medically underserved individuals, and
specifically include providers described
in section 340B(a)(4) of the PHS Act and
section 1927(c)(1)(D)(i)(IV) of the Social
Security Act. The ECP categories
include: Family planning providers,
Indian health care providers, Federally
Qualified Health Centers, hospitals,
Ryan White providers, and other ECP
providers. QHP issuers must include a
sufficient number and geographic
distribution of ECPs in their networks,
where available. Section 156.235
establishes the requirements for
inclusion of ECPs in QHP provider
networks and provides an alternate
standard for issuers that provide a
majority of covered services through
physicians employed directly by the
issuer or a single contracted medical
group.
In assessing the appropriate PY 2023
ECP standard for medical QHP and
SADP QHP certification, HHS has
considered multiple options for
strengthening our ECP policy. After
careful consideration, HHS proposes the
approaches described below. States
performing plan management functions
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685
in the FFEs would be permitted to use
a similar approach.
Section 156.235(a)(2)(i) provides that
a plan has a sufficient number and
geographic distribution of ECPs if it
demonstrates, among other criteria, that
the network includes as participating
practitioners at least a minimum
percentage, as specified by HHS. HHS
proposes that for PY 2023 and beyond,
the required ECP provider participation
standard be raised from 20 percent to 35
percent of available ECPs based on the
applicable PY HHS ECP list, including
approved ECP write-ins that would also
count toward a QHP issuer’s satisfaction
of the 35 percent threshold. HHS would
consider a plan to have satisfied the
regulatory standard if the issuer
contracts with at least 35 percent of
available ECPs in each plan’s service
area to participate in the plan’s provider
network. The calculation methodology
outlined in the 2018 Letter to Issuers in
the federally-facilitated Marketplaces
and 2018 Payment Notice would remain
unchanged for issuers offering plans
with a provider network.
The PY 2023 HHS ECP list will be
based on data maintained by HHS as
well as provider data that HHS receives
directly from providers through the ECP
petition process for PY 2023. HHS will
include on the PY 2023 HHS ECP list
those providers that submitted an ECP
petition during the ECP petition
window that closed on August 18, 2021,
and that meet the definition of an ECP
under § 156.235.
In developing this proposal, HHS
considered that when the ECP threshold
was 30 percent in PYs 2015–2017, all
QHP issuers satisfied the 30 percent
threshold with minimal reliance on ECP
write-ins and justifications. In PYs
2018–2021, when the ECP threshold
was 20 percent, all QHP issuers satisfied
the lower threshold with ease and very
little reliance on ECP write-ins and
justifications. Beginning in 2019, HHS
began publication of the ‘‘Rolling Draft
ECP list’’, which significantly eased
issuer burden for satisfying a higher
threshold by allowing issuers to preview
changes (that is, additions and
removals) to the ECP list year-round in
preparation for upcoming plan year
contracting. Finally, in PY 2021, the
percentage of medical and dental FFE
issuers that could have satisfied a 35
percent ECP threshold was 80 percent
and 74 percent, respectively; while the
mean and median ECP score across all
FFE issuers was 55 percent and 54
percent, respectively.
HHS anticipates that any QHP issuers
falling short of the 35 percent threshold
for PY 2023 could satisfy the standard
by using ECP write-ins and
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justifications. As in previous years, if an
issuer’s application does not satisfy the
ECP standard, the issuer would be
required to include as part of its
application for QHP certification a
satisfactory justification describing how
the issuer’s provider networks, as
presently constituted, provides an
adequate level of service for low-income
and medically underserved individuals
and how the issuer plans to increase
ECP participation in the issuer’s
provider network(s) in future years. At
a minimum, such justification must
include the number of contracts offered
to ECPs for PY 2023, the number of
additional contracts an issuer expects to
offer and the timeframe of those
planned negotiations, the names of the
specific ECPs to which the issuer has
offered contracts that are still pending,
and contingency plans for how the
issuer’s provider network, as currently
designed, will provide adequate care to
enrollees who might otherwise be cared
for by relevant ECP types that are
missing from the issuer’s provider
network.
HHS also proposes that, for plans that
use tiered networks, to count toward the
issuer’s satisfaction of the ECP standard,
ECPs must be contracted within the
network tier that results in the lowest
cost sharing obligation. For example, a
QHP issuer cannot use the number of
ECPs contracted with their PPO network
when certifying a plan using their HMO
network, if use of PPO network
providers would result in higher cost
sharing obligations for HMO plan
enrollees. For plans with two network
tiers (for example, participating
providers and preferred providers), such
as many PPOs, where cost sharing is
lower for preferred providers, only the
preferred network would be counted
towards ECP standards. We propose to
codify the network tiering requirement
for ECP in regulation at § 156.235.
Additionally, for PY 2023 and
beyond, HHS proposes that issuers
could comply with the requirement at
§ 156.235(a)(2)(ii)(B) to offers contracts
to at least one ECP in the category of
‘other ECP providers’’ by offering a
contract to a Substance Use Disorder
Treatment Center. These facilities are
critical to HHS’ efforts to ensure that
low-income, medically underserved
individuals have sufficient access to this
EHB. We are also considering making
non-substantive revisions to § 156.235,
which requires QHPs to offer contracts
to at least one ECP in each of the ECP
categories, to improve readability and
clarity, and to more closely reflect how
Exchanges may operationalize this
requirement. For example, the
regulation text presently does not
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include language that specifically
identifies which providers may fit the
category of ‘Other ECP Providers.’ We
solicit comments on whether clarifying
revisions are necessary and on how best
to clarify this requirement in the
regulation text.
In addition to these proposed
changes, HHS seeks comment on
whether and how QHP issuers should
increase the use of telehealth services as
part of their contingency planning to
ensure access to adequate care for
enrollees who might otherwise be cared
for by relevant ECP types that may be
missing from the issuer’s provider
network. We also seek comment on if
we should consider adding newly
Medicare-certified Rural Emergency
Hospitals to our Hospitals ECP category.
These proposed changes are
consistent with the directive from E.O.
13985. HHS anticipates positive health
equity impact as we believe these
changes will increase access to quality,
relevant health care for low-income and
medically underserved individuals.
HHS seeks comment on these proposals,
including from ECPs and issuers serving
low-income and medically underserved
populations. HHS also seeks comment
on ideas for further strengthening ECP
policy.
14. Standards for Downstream and
Delegated Entities (§ 156.340)
We propose to amend and add
language to § 156.340 to extend the
existing downstream and delegated
standards to QHP issuers on all
Exchange models, including State
Exchanges and State Exchange SHOPs,
and Exchange models that use the
Federal platform, including, FFEs, SBE–
FPs, FF–SHOPs; and HHS also proposes
to add a requirement that all agreements
between QHP issuers and their
downstream and delegated entities
include language stating that the
relevant Exchange authority, including
State Exchanges, may demand and
receive the downstream or delegated
entity’s books, contracts, computers, or
other electronic systems, including
medical records and documentation,
relating to the QHP issuer’s obligations
in accordance with Federal standards
under paragraph (a) of this section until
10 years from the final date of the
agreement period. These changes would
hold QHP issuers in all models of
Exchange responsible for their
downstream and delegated entities’
adherence to applicable federal
standards related to Exchanges, and to
make their oversight obligations, and
the obligations of their downstream and
delegated entities, explicit in regulation
and in the QHP issuers’ agreements with
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their downstream and delegated
entities. We also propose to amend the
title of subpart D of 45 CFR part 156
from ‘‘Standards for Qualified Health
Plan Issuers on Federally Facilitated
Exchanges and State-Based Exchanges
on the Federal platform’’ to ‘‘Standards
for Qualified Health Plan Issuers on
Specific Types of Exchanges’’ to align
with the proposed changes to extend the
applicability of the § 156.340 to all
Exchange models.
Section 156.340 was originally
adopted in 2013 as part of the first
Program Integrity Rule and is similar to
existing standards for downstream and
delegated entity that contract with
Medicare Advantage Organizations.350 It
currently provides that, notwithstanding
any relationship(s) that a QHP issuer
may have with delegated or downstream
entities, the QHP issuer maintains
responsibility for its compliance and the
compliance of any of its delegated or
downstream entities, with all applicable
federal standards related to Exchanges,
including those at § 156.340(a)(1)
through (4). Specifically, these
paragraphs reference obligations set
forth under: Subpart C of part 156,
which governs QHP minimum
certifications standards for all types of
Exchange, with several provisions
specific to FFEs or to Exchanges that use
the Federal platform; subpart K of part
155, which governs Exchange functions
pertaining to QHP certification for all
types of Exchange, with several
provisions specific to FFEs; subpart H of
part 155, which governs the Exchange
functions of the SHOP, including State
Exchange SHOPs, SBE–FP–SHOPs and
FF–SHOPs; standards in § 155.220 with
respect to agents, brokers, and webbrokers assisting with enrollment in
QHPs offered through FFEs, FF–SHOPs,
SBE–FPs, and SBE–FP–SHOPs; and
standards in §§ 156.705 and 156.715 for
maintenance of records and compliance
reviews for QHP issuers operating in an
FFE and an FF–SHOP. In the 2019
Payment Notice, we amended
§ 156.340(a)(2) to include language
incorporating cross-references to SHOP
provisions, to ensure consumers on the
FF–SHOPs received the protections the
provision intended for them to
receive.351
In this rule, we propose to amend
paragraph (a) by adding language stating
that the applicable standards for which
the QHP issuers and their downstream
and delegated entities are responsible
depend on the Exchange model in
which the issuer provides coverage. We
propose to remove existing paragraphs
350 78
351 83
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(a)(1) through (a)(4) that currently
identify the key applicable standards as
examples of the requirements with
which QHP issuers must ensure their
downstream and delegated entities
comply, and create a new paragraph
(a)(1) that outlines the standards
applicable to QHP issuers participating
in State Exchanges. In proposed new
paragraph (a)(1), QHP issuers
participating in State Exchanges,
including State Exchange SHOPs, would
be responsible for ensuring their
downstream and delegated entities
comply with the standards of subpart C
of part 156 with respect to each of its
QHPs on an ongoing basis and the
Exchange processes, procedures, and
standards in accordance with subparts
H and K of part 155, including
§§ 155.705 and 155.706 for the small
group market, unless the standard is
specifically identified as applicable to
only the FFE or FF–SHOP. This new
proposed paragraph (a)(1) would
generally extend applicability of the
current downstream and delegated
standards captured in existing
paragraphs (a)(1)–(a)(2) of § 156.340 to
QHP issuers participating in State
Exchanges, including State Exchange
SHOPs, if the standard is otherwise
applicable to the Exchange type in
which the QHP issuer is operating.
We further propose to create a new
paragraph (a)(2) to outline the standards
applicable to QHP issuers providing
coverage on Exchange models that use
the Federal platform. In proposed new
paragraph (a)(2), QHP issuers
participating in FFEs, FF–SHOPs, SBE–
FPs, or SBE–FP–SHOPs would be
responsible for ensuring their
downstream and delegated entities
comply with the standards of subpart C
of part 156 with respect to each of its
QHPs on an ongoing basis; the Exchange
processes, procedures, and standards in
accordance with subparts H and K of
part 155, including §§ 155.705 and
155.706 for the small group market; the
standards of § 155.220 with respect to
agents, brokers and web-brokers
assisting with enrollment in QHPs; and
the standards of §§ 156.705 and 156.715
for maintenance of records and
compliance reviews if applicable to the
Exchange type in which the QHP issuer
is operating. This new proposed
paragraph (a)(2) would apply the
current downstream and delegated
standards in existing paragraphs (a)(1)
through (a)(4) of § 156.340 to QHP
issuers participating in FFEs, FF–
SHOPs, SBE–FPs, and SBE–FP–SHOPs
if the standard is otherwise applicable
to the Exchange type in which the QHP
issuer is operating.
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We also propose to add a new
paragraph (b)(5), pertaining to record
retention, incorporating the requirement
that contracts between QHP issuers and
their downstream and delegated entities
include language that the relevant
Exchange authority, including State
Exchanges, may demand and receive the
delegated or downstream entity’s books,
contracts, computers, or other electronic
systems, including medical records and
documentation, relating to the QHP
issuer’s obligations in accordance with
Federal standards under paragraph (a) of
this section until 10 years from the final
date of the agreement period. This
amendment would ensure the relevant
Exchange authority—whether the FFE,
SBE–FP or State Exchange—has access
to the records and information from
delegated and downstream entities that
are necessary to ensure compliance with
applicable minimum Federal standards
related to Exchanges.
These proposed amendments to
§ 156.340 will better align the regulation
with its intent and prevent confusion on
the part of regulated entities and their
downstream and delegated entities.
We propose this amendment be
applicable as of the effective date of the
final rule. We seek comment on these
proposed amendments.
15. Payment for Cost-Sharing
Reductions—Clarification of CSR
Payment and Data Collection Processes
(§ 156.430)
HHS proposes to amend § 156.430 to
clarify when CSR data submission is
mandatory or voluntary. Section
156.430 establishes parameters for the
advance payment for CSRs, the
associated data submission standards,
and how final CSR payment and charges
are reconciled. On October 11, 2017, the
Attorney General issued a legal opinion
that HHS did not have a valid
Congressional appropriation with which
to make CSR payments to issuers.352 As
a result, CSR payments ceased as of
October 12, 2017.353 Because issuers
were not receiving CSR payments from
HHS, beginning with the 2018 benefit
year CSR Reconciliation Data
Submission process, HHS made the CSR
data submission process voluntary. To
clarify the data submission
requirements, we propose to amend
§ 156.430 to clarify that this data
submission is mandatory for those
issuers that receive CSR payments from
352 Acting Secretary’s memorandum enclosing
Attorney General’s opinion regarding CSR
payments (2017), available at https://www.hhs.gov/
sites/default/files/csr-payment-memo.pdf.
353 Ibid.
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HHS for any part of the benefit year and
voluntary for other issuers.
To do this, we are proposing several
modifications to § 156.430. First, we
propose to amend § 156.430(b)(1) to
clarify that when there is an HHS
appropriation to make CSR payments to
issuers, an issuer will receive periodic
advance payments to the extent
permitted by the appropriation and
based on the advance payment amounts
established in guidance. We believe that
this proposed change clarifies that the
data submission requirements are
mandatory for those issuers that receive
CSR payments from HHS for any part of
the benefit year. Further, and in line
with the current practice, HHS will
continue to provide those issuers that
do not receive CSR payments from HHS
the option to submit CSR data.
Second, we propose to amend
§ 156.430(d) to reflect a change of focus
from reconciliation of CSR amounts to
the timing and nature of CSR data
submissions, specifically when CSR
payments are made. We propose to
amend § 156.430(d) to state that HHS
will periodically provide a submission
window for issuers to submit CSR data
documenting CSR amounts issuers paid,
as specified in § 156.430(d)(1) and (2),
in a form and manner specified by HHS
in guidance, and calculated in
accordance with § 156.430(c). When an
appropriation is available for HHS to
make CSR payments to QHP issuers,
HHS will notify QHP issuers that the
submission of the CSR data is
mandatory for those issuers that
received CSR payments from HHS for
any part of the benefit year, and will use
the data to reconcile advance CSR
payments to issuers against the actual
amounts of CSRs issuers provided, as
determined by HHS based on amounts
specified in § 156.430(d)(1) and (2), and
calculated in accordance with
§ 156.430(c).
When CSR payments are not made,
HHS will notify those QHP issuers that
did not receive CSR payments from
HHS for any part of the benefit year that
the submission of the CSR data is
voluntary. The CSR data that must be
submitted in either a voluntary or
mandatory submission includes the data
elements listed in § 156.430(d)(1) and
(2). The purpose of this change is to
clarify when HHS will use CSR data to
reconcile CSR payments. Specifically,
we are proposing that to the extent that
CSR payments from HHS are made to
issuers, the CSR data submission
process would be mandatory for those
issuers having received CSR payments
for any part of the benefit year from
HHS, and would be voluntary for
issuers that did not receive CSR
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payments from HHS for any part of the
benefit year. This approach is consistent
with how HHS has conducted these data
submission processes since the 2018
benefit year CSR data submission
process.
Third, we propose to amend the title
of § 156.430(e) from ‘‘Payment of
discrepancies’’ to ‘‘Cost-sharing
Reductions Payments and Charges’’ to
reflect that this section governs both
payments to issuers for CSR and charges
levied against issuers for CSR.
Lastly, we propose to amend
§ 156.430(e)(1) to clarify that HHS will
collect data regarding the CSRs actually
provided by issuers to their enrollees as
opposed to collecting data on the dollar
value of CSRs HHS provided to the
issuer, and to further clarify that HHS
only pays reconciled CSR amounts
when there is an appropriation to make
CSR payments and to the extent
permitted by such appropriation. We
believe these proposed changes would
provide issuers with further clarity
regarding the intention of CSR data
submission requirements.
We note that, regardless of whether
HHS makes CSR payments, issuers are
required to provide CSRs to enrollees as
specified at § 155.1030. We solicit
comment on these proposals.
16. Quality Standards: Quality
Improvement Strategy (§ 156.1130)
In accordance with section
1311(c)(1)(E) of the ACA, quality
improvement strategies described in
section 1311(g)(1) of the ACA must be
implemented across Exchanges as a
QHP certification requirement. Section
1311(g)(1) of the ACA defines a QIS as
a payment structure that provides
increased reimbursement or other
incentives for implementing activities
related to the five health care topic areas
defined in statute: Improving health
outcomes of plan enrollees, preventing
hospital readmissions, improving
patient safety and reducing medical
errors, promoting wellness and health,
and reducing health and health care
disparities. Under § 156.1130(a), a QHP
issuer participating in an Exchange for
2 or more consecutive years must
implement and report on a QIS,
including a payment structure that
provides increased reimbursement or
other market-based incentives in
accordance with the health care topic
areas in section 1311(g)(1) of the ACA,
for each QHP offered in an Exchange,
consistent with the guidelines
developed by HHS under section
1311(g) of the ACA. In the 2016
Payment Notice, HHS established a
phase-in approach for QIS
implementation standards and reporting
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requirements to provide QHP issuers the
necessary time to understand the
populations enrolling in a QHP offered
through the Exchange and to build
quality performance data on their
respective QHP enrollees.354 HHS noted
that implementation of a QIS should be
a continuous improvement process for
which QHP issuers define the health
outcome needs of their enrollees, set
goals for improvement, and provide
increased reimbursement to their
providers or other market-based
incentives to reward achievement of
those goals.355 In line with this
approach and pursuant to the authority
granted under § 156.1130(a) and section
1311(g) of the ACA, HHS proposes to
update the QIS standards and enter the
next phase of implementation by
adopting a new guideline that would
apply to QHP issuers beginning in 2023.
Specifically, we propose a new
guideline under which QHP issuers
would be required to address health and
health care disparities as a specific topic
area within their QIS, in addition to at
least one other topic area described in
section 1311(g)(1) of the ACA beginning
in 2023. We propose this expansion of
the QIS standards, which aligns with
health equity efforts across federal
government policies and programs;
however, we are not proposing
amendments to the regulatory text
outlined in § 156.1130.
Persistent inequities in health care
outcomes exist in the United States,
including among populations enrolling
in QHPs across Exchanges. Belonging to
a racial or ethnic minority group, living
with a disability, being a member of the
lesbian, gay, bisexual, transgender, and
queer (LGBTQI+) community, having
limited English proficiency, living in a
rural area, or being near or below the
poverty level, is often associated with
worse health outcomes.356 Such
354 80
FR 10750 at 10844 (Feb. 27, 2015).
355 Ibid.
356 See Lindenauer PK, Lagu T, Rothberg MB, et
al. Income Inequality and 30-Day Outcomes After
Acute Myocardial Infarction, Heart Failure, and
Pneumonia: Retrospective Cohort Study. British
Medical Journal. 2013;346; Trivedi AN, Nsa W,
Hausmann LRM, et al. Quality and Equity of Care
in U.S. Hospitals. New England Journal of
Medicine. 2014;371(24):2298–2308; Polyakova, M.,
et al. Racial Disparities In Excess All-Cause
Mortality During The Early COVID–19 Pandemic
Varied Substantially Across States. Health Affairs.
2021; 40(2): 307–316; Rural Health Research
Gateway. Rural Communities: Age, Income, and
Health Status. Rural Health Research Recap.
November 2018; https://
www.minorityhealth.hhs.gov/assets/PDF/Update_
HHS_Disparities_Dept-FY2020.pdf; www.cdc.gov/
mmwr/volumes/70/wr/mm7005a1.htm; Poteat TC,
Reisner SL, Miller M, Wirtz AL. COVID–19
Vulnerability of Transgender Women With and
Without HIV Infection in the Eastern and Southern
U.S. Preprint. medRxiv. 2020;2020.07.21.20159327.
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disparities in health outcomes are the
result of a number of factors and exist
irrespective of health insurance
coverage type. Although not the sole
determinant, poor health care access
and provision of lower quality health
care contribute to health disparities. In
fact, research has shown that the
expansion of health insurance coverage,
for example through Medicaid
expansion under the ACA, and the
resulting increased access to health care,
is linked to reductions in disparities in
health insurance coverage as well as
reductions in disparities in health
outcomes.357
We are specifically committed to
achieving equity in health care
outcomes for QHP enrollees by
supporting QHP issuers in quality
improvement activities to reduce health
and health care disparities, and
promoting issuer accountability for
improving equity in the health and
health care of their enrollee
populations. For the purposes of this
proposed rule, we are using the
definition of ‘‘equity’’ established in
Executive Order 13985, issued on
January 20, 2021, as ‘‘the consistent and
systematic fair, just, and impartial
treatment of all individuals, including
individuals who belong to underserved
communities who have been denied
such treatment, such as Black, Latino,
and Indigenous and Native American
persons, Asian Americans and Pacific
Islanders and other persons of color;
members of religious minorities;
LGBTQI+ persons; persons with
disabilities; persons who live in rural
areas; and persons otherwise adversely
affected by persistent poverty or
inequality.’’ 358 In light of the COVID–19
PHE, which is having a disproportionate
and severe impact on underserved
populations, and in line with the goals
of Executive Order 13985, CMS is
strengthening efforts across all programs
to address disparities and advance
health equity. This is a topic area that
QHP issuers across the Exchanges have
increasingly been focusing on in their
QIS submissions.
Upon CMS evaluation of QHP issuer
QIS submissions in the FFEs, an
estimated 60 percent of QIS submissions
in PY 2020 did address health care
disparities. Building on the phase-in
Published 2020 Jul 24. doi:10.1101/
2020.07.21.20159327.
357 Guth M, Garfield R, Rudowitz R. The Effects
of Medicaid Expansion Under the ACA: Studies
from Jan 2014 to Jan 2020.
358 86 FR 7009 (Jan. 25, 2021), available at https://
www.federalregister.gov/documents/2021/01/25/
2021-01753/advancing-racial-equity-and-supportfor-underserved-communities-through-the-federalgovernment.
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approach established in the 2016
Payment Notice and our experiences
evaluating QIS submissions over the
years and during the COVID–19 PHE,
we now propose to update the QIS
standards. We propose to require QHP
issuers to address health and health care
disparities as one topic area of their QIS
in addition to at least one other topic
area described in section 1311(g)(1) of
the ACA beginning in 2023. As
previously noted, we are proposing this
expansion of the QIS standards, which
aligns with health equity efforts across
federal government policies and
programs; however, we are not
proposing amendments to the regulatory
text outlined in § 156.1130. We seek
comment on this proposal.
17. Disbursement of Recouped HighCost Risk Pool Funds—Administrative
Appeals of Issuers of Risk Adjustment
Covered Plans (§ 156.1220)
HHS proposes that any funds
recouped as a result of a successful
high-cost risk pool administrative
appeal under § 156.1220(a)(1)(ii) would
be used to reduce high cost-risk pool
charges for that national high-cost risk
pool for the current benefit year, if highcost risk pool payments have not
already been calculated for that benefit
year. If high-cost risk pool payments
have already been calculated for that
benefit year, we propose to use any
funds recouped as a result of a
successful high-cost risk pool
administrative appeal to reduce highcost risk pool charges for that national
high-cost risk pool for the next benefit
year. As discussed earlier in this rule,
we also proposed similar treatment of
high-cost risk pool funds HHS recoups
as a result of audits of risk adjustment
covered plans under § 153.620(c)(5)(ii)
and as a result of actionable
discrepancies under § 153.710(d). We
propose to treat high-cost risk pool
funds recouped as a result of a
successful appeal the same way, that is,
the recouped funds would be used to
reduce high-cost risk pool charges for
that national high-cost risk pool for the
next benefit year for which high-cost
risk pool payments have not already
been calculated.
We also clarify that when HHS
recoups high-cost risk pool funds as a
result of a successful administrative
appeal, the issuer that filed the appeal
would then be responsible for reporting
that adjustment to its high-cost risk pool
payments or charges in the next MLR
reporting cycle consistent with the
applicable instructions in 45 CFR
153.710(h). Additionally, for any benefit
year in which high-cost risk pool
charges are reduced as a result of high-
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cost risk pool funds recouped as a result
of an actionable discrepancy, issuers
whose charge amounts are reduced
would report the high-cost risk pool
charges paid for that benefit year net of
recouped audit funds in the next MLR
reporting cycle consistent with 45 CFR
153.710(h).
We seek comment on this proposal.
18. Direct Enrollment With the QHP
Issuer in a Manner Considered To Be
Through the Exchange (§ 156.1230)
We propose to amend § 156.1230 such
that its nondiscrimination protections
would explicitly prohibit discrimination
based on sexual orientation and gender
identity. HHS previously codified such
nondiscrimination protections at
§ 156.1230, but amendments made in
2020 to § 156.1230 removed any
reference to sexual orientation and
gender identity. If finalized, this
proposal would revert § 156.1230 to the
pre-2020 nondiscrimination protections.
Section 156.1230(b)(2) states that the
QHP issuer must provide consumers
with correct information, without
omission of material fact, regarding the
FFE, QHPs offered through the FFE, and
insurance affordability programs, and
refrain from marketing or conduct that
is misleading a consumer into believing
they are visiting HealthCare.gov,
coercive, or discriminates based on race,
color, national origin, disability, age, or
sex. Previously, in the 2017 Payment
Notice final rule, HHS finalized at
§ 155.220(j)(2)(i) standards that
prohibited agents, brokers and webbrokers from discriminating on the basis
of sexual orientation and gender
identity, among other factors.359 In the
2018 Payment Notice final rule, we
added this nondiscrimination standard
from § 155.220(j) to § 156.1230(b) so that
the nondiscrimination protections on
the basis of sexual orientation and
gender identity also applied to issuers
using direct enrollment on an FFE.360
However, in the 2020 final rule related
to section 1557, HHS revised certain
CMS regulations, including
§ 156.1230(b)(2), by removing sexual
orientation and gender identity as bases
of discrimination subject to the CMS
regulations’ nondiscrimination
protections.361
CMS possesses statutory authority
independent of section 1557 of the ACA
to prohibit discrimination in enrollment
through the Exchanges by issuers of
QHPs on the Exchanges under the
359 81
FR 12204 (March 8, 2016).
FR 94058 (December 22, 2016).
361 85 FR 37160 (June 19, 2020); See id. at 37218–
21 (the 2020 section 1557 final rule revised the
following CMS regulations: 45 CFR 147.104,
155.120, 155.220, 156.200, 156.1230).
360 81
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authority to establish requirements with
respect to the operation of Exchanges,
the offering of QHPs through such
Exchanges, and other requirements as
the Secretary determines appropriate in
sections 1321(a)(1)(A), (B), and (D) of
the ACA. Pursuant to this authority, in
the 2018 Payment Notice final rule,
HHS finalized at § 156.1230(b)(2)
standards applicable to issuers using
direct enrollment on an FFE to require
that issuers refrain from marketing or
conduct that is misleading, coercive, or
discriminatory, including on the basis of
sexual orientation or gender identity.
HHS explained it was adding this
nondiscrimination standard from
§ 155.220(j) to § 156.1230(b) so that the
nondiscrimination protections on the
basis of sexual orientation and gender
identity also applied to issuers using
direct enrollment on an FFE. HHS
proposes to exercise that same authority
here to amend § 156.1230(b) to again
prohibit issuers using direct enrollment
on an FFE from discriminating based on
sexual orientation and gender identity.
Sections 1321(a)(1)(A), (B), and (D) of
the ACA are the same authority CMS
relies upon for implementation of
existing nondiscrimination protections
at § 156.200(e). Utilizing this same
authority to again prohibit
discrimination based on sexual
orientation and gender identity at
§ 156.1230(b) would be consistent with
the authority CMS relies upon for the
existing protections at § 156.1230(b) that
currently prohibit discrimination on the
basis of race, color, national origin,
disability, age, or sex. We believe such
amendments are warranted in light of
the existing trends in health care
discrimination and are necessary to
better address barriers to health equity
for LGBTQI+ individuals.
A more in-depth discussion of these
developments and other factors
considered in proposing these
amendments to CMS nondiscrimination
protections is included earlier in the
preamble to § 147.104 under section
III.B.1.b. of this preamble. For brevity,
we refer back to that section of the
preamble rather than restating the issues
here.
19. Solicitation of Comments—Choice
Architecture and Preventing Plan
Choice Overload
One of the primary goals of the ACA
is to provide consumers access to
quality, comprehensive health coverage
options, as well as the information and
assistance they need to make coverage
choices that are right for them. For this
reason, both Federal and State
Exchanges invest significant time and
resources to building Exchanges that
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support consumer access to competitive
health plan options that offer
sufficiently diverse benefit options that
give consumers a meaningful choice
between Exchange coverage options.
Exchanges also work to ensure that QHP
information is presented to consumers
in a manner that is clear and easy to
understand, and allows consumers to
accurately recognize the material
differences between plan options.
Although HHS continues to prioritize
competition and choice on the
Exchanges, we are concerned about plan
choice overload which can result when
consumers have too many choices in
plan options on an Exchange. A 2016
report by the RAND Corporation
reviewing over 100 studies concluded
that having too many health plan
choices can lead to poor enrollment
decisions due to the difficulty
consumers face in processing complex
health insurance information.362
Earlier under this section E. of the
preamble, we introduced a proposal to
require that FFE and SBE–FP issuers
offer certain standardized options to be
designed by HHS. Standardized options
offer a solution to the problems of
choice overload through simplifying
cost sharing structures and increasing
plan comparability by allowing
consumers to focus on premium price,
provider network, and plan quality.363
In light of the proliferation of seemingly
similar plans offered through the
Exchanges over the last several years,
HHS wishes to explore whether it
should limit the total number of plans
issuers may offer through the FFEs and
SBE–FPs in future PYs in order to
further streamline and optimize the plan
selection process for consumers on the
Exchanges.
HHS’s desire to limit the number of
plans that issuers can offer through the
Exchanges arises following the sharp
increase in plan offerings in recent
years. For example, in the FFEs and
SBE–FPs in PY 2019, there was an
enrollee-weighted average of 1.2
catastrophic plans, 7.9 bronze plans,
12.3 silver plans, 4.6 gold plans, and 1.1
platinum plans available per enrollee,
amounting to a total of 27.1 plans
available per enrollee. In the FFEs and
SBE–FPs in PY 2022, based on current
filing data, it is expected that there will
be an enrollee-weighted average of 2.7
362 Taylor EA, Carman KG, Lopez A, Muchow
AN, Roshan P, and Eibner C. Consumer
Decisionmaking in the Health Care Marketplace.
RAND Corporation. 2016.
363 ‘‘Facilitating Consumer Choice: Standardized
Plans in Health Insurance Marketplaces.’’ Office of
the Assistant Secretary for Planning and Evaluation,
U.S. Department of Health and Human Services.
December 2021. Available at https://aspe.hhs.gov/.
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catastrophic plans, 40.4 bronze plans,
45.3 silver plans, 19.2 gold plans, and
1.6 platinum plans available per
enrollee, amounting to a total of 109.2
plans available per enrollee.
In PY 2022, it is expected that several
rating areas will have more than 50
silver plans, excluding CSR variations,
available to consumers—a number we
expect will make it difficult for
consumers to make reasonably informed
decisions. This proliferation of plans is
only partially attributable to new market
entrants, since in PY 2019, consumers
could select QHPs from an enrolleeweighted average of 2.8 issuers per
enrollee, while in PY 2022, it is
expected consumers will be able to
select QHPs from an enrollee-weighted
average of 6.3 issuers per enrollee. The
fact that the enrollee-weighted average
number of plan offerings increased by a
factor of four while the enrolleeweighted average number of issuers
only increased by a factor of just over
two between PYs 2019 and 2022
suggests consideration of the need to
limit the proliferation of seemingly
similar plans in order to further
streamline and optimize the plan
selection process for consumers on the
Exchanges.
HHS is concerned that having an
excessive number of health plan options
may make consumers less likely to
complete any plan selection and more
likely to select a plan that does not
match their health needs. In studies of
consumer behavior in Medicare Part D,
Medicare Advantage, and Medigap, a
choice of 15 or fewer plans was
associated with higher enrollment rates,
while a choice of 30 or more plans led
to a decline in enrollment rates.364
These conclusions are supported by the
comments received during prior
rulemaking in which a significant
number of commenters raised concerns
that removing tools that facilitate the
plan selection process causes consumers
to face choice paralysis and leads to a
reduction in overall enrollment in
QHPs, undermining the purpose of
Exchanges—to allow people to compare
and purchase QHPs.
HHS’s experience during its annual
open enrollment period also suggests
that ‘‘many consumers, particularly
those with a high number of health plan
options, find the large variety of costsharing structures available on the
Exchanges difficult to navigate.’’ 365
Thus, in order to streamline and
364 Chao Zhou and Yuting Zhang, ‘‘The Vast
Majority of Medicare Part D Beneficiaries Still Don’t
Choose the Cheapest Plans That Meet Their
Medication Needs.’’ Health Affairs, 31, no.10
(2012): 2259–2265.
365 80 FR 75,488, 75,542 (Dec. 2, 2015).
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optimize the plan selection process for
consumers on the Exchanges, HHS is
interested in exploring possible
methods of improving choice
architecture. Several proposals within
this rulemaking complement this goal,
including the standardized options
proposal at § 156.201 and the proposals
to change the applicable AV de minimis
range at §§ 156.140, 156.200, and
156.400.
Specifically, the standardized options
proposal at § 156.201 proposes to
require FFE and SBE–FP issuers to offer
plans with standardized cost-sharing
parameters at every product network
type, metal level, and throughout every
service area that they offer nonstandardized options. Though this
proposal does not limit the number of
non-standardized options, HHS intends
to consider and propose future
rulemaking, as appropriate, to
determine whether to limit the number
of non-standard plans that FFE and
SBE–FP issuers may offer through the
Exchanges in PYs beginning on or after
January 1, 2024.
Additionally, the proposals at
§§ 156.140, 156.200, and 156.400
propose to modify the AV de minimis
ranges. HHS proposes to modify the de
minimis ranges at § 156.140(c)
beginning in PY 2023 to +2/¥2
percentage points for all individual and
small group market plans subject to the
AV requirements under the EHB
package, other than for expanded bronze
plans, for which HHS proposes a de
minimis range of +5/¥2. Under
§ 156.200, HHS proposes, as a condition
of certification as a QHP, to limit the de
minimis range to +2/0 percentage points
for individual market silver QHPs. HHS
also proposes under § 156.400 to specify
de minimis ranges of +1/0 percentage
points for income-based silver CSR plan
variations. HHS anticipates that these
proposals will have the effect of
decreasing the number of plan offerings
due to more restricted AV de minimis
ranges.
HHS is also considering resuming the
meaningful difference standard that was
previously codified at 45 CFR 156.298.
The meaningful difference standard was
first finalized in the 2015 Payment
Notice, revised in the 2017 Payment
Notice, and discontinued and removed
from regulation in the 2019 Payment
Notice. The meaningful difference
standard was originally intended to
enhance consumer understanding of the
differences between plans and enable
optimal consumer choice. It was then
considered to be no longer necessary
given the decreased number of issuers
and plans offered through the FFEs and
SBE–FPs in PY 2019. Given that the
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number of plans offered through the
Exchanges has increased sharply over
the last several years, HHS believes that
resuming the meaningful difference
standard could play a constructive role
in limiting the proliferation of
seemingly similar plans on the
Exchanges, thus further streamlining
and optimizing the plan selection
process for consumers on the
Exchanges.
HHS also acknowledges that a number
of State Exchanges have successfully
employed an active purchaser model in
which these Exchanges selectively
negotiate contracts with issuers, limit
the total number of issuers that can offer
QHPs through the Exchange, require
issuers to offer standardized options
exclusively, and exclude plans that have
not demonstrated the administrative
capability, prices, networks or product
designs that improve consumer value.
HHS intends to consider whether such
a model would be appropriate in future
PYs to achieve the aforementioned goals
of streamlining the plan selection
process for consumers on the
Exchanges.
We seek comment on the utility of
limiting the number of plans that FFE
and SBE–FP issuers can offer through
the Exchanges in future PYs in order to
avoid plan choice overload and to
further streamline and optimize the plan
selection process for consumers on the
Exchanges. We also seek comment on
the impact of limiting the number of
plans that issuers can offer through the
Exchanges and on effective methods to
achieve this goal, the advantages and
disadvantages of these methods, and if
there are alternative methods we have
not considered.
We also seek comment on other
evidence-based approaches to improve
choice architecture within the
Exchanges.
F. Part 158—Issuer Use of Premium
Revenue: Reporting and Rebate
Requirements
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1. Reimbursement for Clinical Services
Provided to Enrollees (§ 158.140)
We propose to amend
§ 158.140(b)(2)(iii) to clarify that only
those provider incentives and bonuses
that are tied to clearly defined,
objectively measurable, and welldocumented clinical or quality
improvement standards that apply to
providers may be included in incurred
claims for MLR reporting and rebate
calculation purposes.
Section 2718(a) of the PHS Act
requires health insurance issuers
offering group or individual health
insurance coverage (including a
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grandfathered health plan) to, for MLR
purposes, separately report the
percentage of total premium revenue
(after certain adjustments) expended on
reimbursement for clinical services
provided to enrollees under such
coverage, for activities that improve
health care quality, and on all other
non-claims (administrative) costs.
Section 2718(b) of the PHS Act requires
a health insurance issuer to provide an
annual rebate to each enrollee if the
issuer’s MLR falls below the applicable
MLR standard established in section
2718(b)(1)(A)(i) and (ii). Section 158.140
sets forth the MLR reporting
requirements related to the
reimbursement for clinical services
provided to enrollees, including a
requirement in § 158.140(b)(2)(iii) that
issuers must include in incurred claims
the amount of incentive and bonus
payments made to providers. Incentive
and bonus payments made to providers
were originally required to be included
in incurred claims to reflect certain
claim liability accounting practices of
HMOs,366 but due to the lack of clarity
and specificity in the regulations, have
resulted in inclusion of a variety of
incentive and bonus payments to
providers. However, inclusion of many
types of provider incentives and
bonuses in incurred claims is
appropriate and consistent with the
purpose of the statute to the extent such
bonuses reward or incentivize providers
to deliver higher-quality care to
consumers and thus lead to higher value
for consumers’ premium payments.
In the course of conducting MLR
examinations pursuant to §§ 158.401
and 158.402, we have observed some
issuers reporting incentive or bonus
payments to providers that are not based
on quality or performance metrics, but
rather, involve transferring excess
premium revenue to providers to
circumvent MLR rebate requirements
and avoid paying MLR rebates when
issuers do not meet the applicable MLR
standard.
Most provider incentive and bonus
agreements we encounter during MLR
examinations tend to have clinical
metrics that must be met by the
provider, rather than the issuer, in order
for payment to occur. However, we have
observed arrangements where the
issuer’s failure to meet the MLR
standard is itself the metric that triggers
the payment of a bonus to the provider.
Under such arrangements, any time an
issuer’s MLR falls below a specified
threshold, including below the
applicable MLR standard (or, similarly,
366 See 75 FR 74874 and https://www.govinfo.gov/
content/pkg/FR-2010-12-01/pdf/2010-29596.pdf.
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691
a metric tied to the issuer’s profitability
or surplus exceeds a specified
threshold), the issuer must pay the
excess profits to a provider group or
hospital system. If such payments are
labeled as a provider ‘‘incentive’’ or
‘‘bonus’’ and are included in the issuer’s
incurred claims, the issuer’s MLR is
artificially raised so that it is close to or
meets the applicable MLR standard.
This artificial inflation of MLR often
eliminates most, or in some cases even
all, of the rebate owed to enrollees,
regardless of how low enrollees’ claims
costs are relative to premiums those
enrollees pay. Such artificial inflation of
MLR denies consumers the protection of
receiving premium rebates guaranteed
by the statute for the years when claims
costs are low due to low utilization of
health care services, such as the years
when numerous medical procedures are
deferred due to a pandemic. In some
cases, when such payments to providers
are inappropriately labeled as
‘‘incentives’’ or ‘‘bonuses,’’ they inflate
paid claims by as much as 30 percent to
40 percent. The incentive for such
arrangements is particularly high for
integrated medical systems where the
issuer is the subsidiary, owner, or
affiliate of a provider group or a hospital
system. Further, in some cases these
‘‘incentives’’ or ‘‘bonuses’’ are not even
paid to the clinical providers, but rather
to the non-clinical parent holding
company of the hospital or provider
group and the issuer.
Although we consider inclusion of the
provider ‘‘incentives’’ and ‘‘bonuses’’
described above in incurred claims
inappropriate under existing regulations
because the described approach directly
contravenes the statute, in order to
increase compliance and improve
program integrity, we propose to amend
§ 158.140(b)(2)(iii) to clarify that only
those provider incentives and bonuses
made to providers that are tied to clearly
defined, objectively measurable, and
well-documented clinical or quality
improvement standards that apply to
providers may be included in incurred
claims for MLR reporting and rebate
calculation purposes. We seek comment
on this proposal.
2. Activities That Improve Health Care
Quality (§ 158.150)
We propose to amend § 158.150(a) to
specify that only expenditures directly
related to activities that improve health
care quality may be included in QIA
expenses for MLR reporting and rebate
calculation purposes.
Section 2718(a) of the PHS Act
requires health insurance issuers
offering group or individual health
insurance coverage (including a
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grandfathered health plan) to, for MLR
purposes, report the percentage of total
premium revenue (after certain
adjustments) expended on
reimbursement for clinical services
provided to enrollees under such
coverage, for activities that improve
health care quality, and on all other
non-claims costs. Section 158.221
defines the numerator of an issuer’s
MLR to include the issuer’s incurred
claims plus the issuer’s expenditures for
activities that improve health care
quality, as defined in §§ 158.150 and
158.151. Section 158.150 describes the
types of activities that qualify as QIA,
but does not specify the types of
expenses that may be included as QIA
expenses, or the extent to which such
expenses must relate to the activity. The
lack of clarity in existing regulations has
caused wide discrepancies in the types
of expenses that issuers include in QIA
expenses and creates an unequal
playing field among issuers. Some
issuers appropriately include only
direct expenses, such as the salaries of
the staff performing actual QIA
functions in QIA expenses. However,
other issuers additionally allocate
indirect expenses such as overhead,
marketing, lobbying, corporate or
holding group overhead, and vendor
profits in QIA expenses. To the extent
they can be quantified, such indirect
expenses often inflate QIA amounts by
33 percent to 50 percent, potentially
reducing rebates provided to enrollees
while providing no value for consumers’
premium dollars. In many other cases,
the amounts of indirect expenses
included in QIA expenses appear to be
arbitrary because there is no reasonable
method to allocate them to QIA as the
expenses have no direct or quantifiable
relationship to health care quality.
A significant portion of QIA expenses
is attributable to salaries of employees
actually performing the QIA. However,
issuers’ employees often perform QIA
only part of the time, while performing
cost containment and other strictly
administrative and profit-generating
functions (such as negotiating provider
rates, or claims adjustment and appeals)
the rest of the time. As a result,
numerous fixed costs that some issuers
allocate to QIA simply because some of
their staff spend some of their time
performing QIA would, for the most
part, exist even if the issuer did not
engage in any QIA. Examples of such
indirect expenses include: Office space
(including rent or depreciation, facility
maintenance, janitorial, utilities,
property taxes, insurance, wall art),
human resources, salaries of general
counsel and executives, computer and
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telephone usage, and company parties
and retreats, including catering and
travel.
Some issuers additionally allocate a
fixed percentage of their entire IT cost
centers to QIA, even though the IT
infrastructure disproportionately
supports regular business functions
such as billing, claims processing,
financial analysis, and cost
containment, and for the most part
would exist even if the issuer did not
engage in any QIA. Examples of such
expenses include: Salaries of IT staff
and call center or help desk staff, data
centers and warehouses, mainframe
equipment, network system applications
and equipment, enterprise data
management, as well as depreciation,
maintenance, and utilities associated
with IT equipment.
Some issuers include in QIA expenses
amounts exceeding the cost of providing
the actual QIA service. For example,
some issuers make a profit when
providing wellness incentives to
enrollees, but structure cost reporting in
a manner that includes such profits in
QIA expenses. In addition, some issuers
include the promotion or marketing of
their QIA services to group
policyholders or enrollees as QIA
expenses. Some issuers also include the
cost of developing the prices of QIA
services sold to group policyholders, or
costs associated with calculating and
reporting QIA expenses.
Section 2718 of the PHS Act created
the first national MLR reporting and
rebating program with the goal of
putting downward pressure on issuers’
administrative expenses and
encouraging issuers to devote more of
the premium dollars to medical
spending and enrollee health. Section
2718 of the PHS Act recognizes that
investing in QIA may improve enrollee
health, thereby increasing the value of
their premium dollars. However, facility
maintenance, utilities, human resources,
salaries of counsel and executives,
computers, travel and entertainment, IT
systems, and marketing of issuers’
products provide no benefit to an
enrollee’s health. By including such
costs in the MLR numerator, the value
of the enrollee’s premium dollars is
actually reduced. Thus, indirect
expenses such as those are described
here are classified as non-claims,
administrative costs for purposes of
reporting incurred claims under
§ 158.140. Allowing issuers to report
these same excluded expenses as
expenditures on QIA is inappropriate
and would undermine the very purpose
and intent of section 2718 of the PHS
Act. It would allow issuers to inflate
QIA costs by including expenses that do
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not actually improve health care quality,
particularly since these expenses are
often fixed costs that would occur
regardless of whether the issuer engages
in QIA. Further, some issuers are not
able to precisely determine what portion
of indirect costs is tied to QIA, as many
issuers do not have an accurate method
to quantify the actual cost of each
expense category as it relates to each
QIA, and thus issuers are often
arbitrarily determining or apportioning
indirect expenses without adequate
documentation to support their
determinations. The lack of clarity in
§ 158.150 as to what expenses may be
included in QIA expenses has created
an uneven playing field that is unfairly
boosting the MLRs of issuers that
include indirect or overhead expenses
in QIA expenses as compared to those
that are not reporting these expenses in
QIA expenses, thus driving up health
care spending and depriving consumers
of value for their premium dollars.
In order to ensure reporting
consistency among issuers and ensure
that QIA expenses included in the MLR
numerator represent actual value
provided for consumers’ premium
dollars, we propose to amend
§ 158.150(a) to specify that only
expenditures directly related to
activities that improve health care
quality may be included in QIA
expenses.
We seek comment on this proposal.
3. Allocation of Expenses (§ 158.170)
As noted in part 2 of the 2022
Payment Notice final rule, on March 4,
2021, the United States District Court
for the District of Maryland decided City
of Columbus, et al. v. Cochran, 523 F.
Supp. 3d 731 (D. Md. 2021). Among
other things, the court vacated
§ 158.221(b)(8), which provided that
beginning with the 2017 MLR reporting
year, an issuer had the option of
reporting an amount equal to 0.8
percent of earned premium in the
relevant State and market in lieu of
reporting the issuer’s actual
expenditures for activities that improve
health care quality, as defined in
§§ 158.150 and 158.151.367 Accordingly,
in part 2 of the 2022 Payment Notice
final rule, we finalized the deletion of
§ 158.221(b)(8) and removed the option
allowing issuers to report the fixed,
standardized amount of QIA and
reverted to requiring issuers to itemize
QIA expenditures, beginning with the
2020 MLR reporting year (MLR reports
that were due by July 31, 2021).
However, we inadvertently failed to
make a conforming amendment to
367 86
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§ 158.170(b). Section 158.170 addresses
allocation of expenses in relation to
MLR reporting in general. Section
158.170(b) requires issuers to describe
the methods used to allocate expenses.
Specifically, § 158.170(b) requires the
report required in § 158.110 to include
a detailed description of the methods
used to allocate, among other things,
‘‘quality improvement expenses (unless
the report utilizes the percentage of
premium option described in
§ 158.221(b)(8), in which case the
allocation method description should
state so),’’ to each health insurance
market in each State. Given the deletion
of § 158.221(b)(8) in part 2 of the 2022
Payment Notice final rule, the reference
in § 158.170(b) to the percentage of
premium QIA reporting option
described in § 158.221(b)(8) is no longer
applicable. Accordingly, we propose
make a technical amendment to
§ 158.170(b) to correct this oversight and
remove the reference to the percentage
of premium QIA reporting option
described in § 158.221(b)(8).
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G. Solicitation of Comments on Health
Equity, Climate Health, and Qualified
Health Plans
On January 20, 2021, President Biden
issued Executive Order 13985, titled
‘‘Advancing Racial Equity and Support
for Underserved Communities through
the Federal Government,’’ which
established a government-wide
approach to advancing equity and
addressing disparities for historically
marginalized communities in the United
States. The order defines equity as ‘‘the
consistent and systematic fair, just and
impartial treatment of all individuals,
including individuals who belong to
underserved communities that have
been denied such treatment.’’ 368
CMS’ Office of Minority Health (CMS
OMH) aligns with Healthy People 2030
that defines health disparities as ‘‘a
particular type of health difference that
is closely linked with social, economic,
and/or environmental disadvantage.
Health disparities adversely affect
groups of people who have
systematically experienced greater
obstacles to health based on their racial
or ethnic group; religion; socioeconomic
status; gender; age; mental health;
cognitive, sensory, or physical
disability; sexual orientation or gender
identity; geographic location; or other
368 Advancing Racial Equity and Support for
Underserved Communities Through the Federal
Government. Executive Office of the President.
2021, https://www.federalregister.gov/documents/
2021/01/25/2021-01753/advancing-racial-equityand-support-for-underserved-communities-throughthe-federal-government.
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characteristics historically linked to
discrimination or exclusion.’’ 369
In alignment with the objectives set
forth by the President’s Executive Order
and CMS OMH, CMS aims to
proactively advance health equity and
improve the health of all Americans,
including racial and ethnic minorities,
sexual and gender minorities, people
with disabilities, individuals with
limited English proficiency, rural
populations, and historically
underserved communities.
Section 1311(e)(1)(B) of the ACA
states an Exchange may certify a health
plan as a QHP if the Exchange
determines that making available such
health plan through such Exchange is in
the interests of qualified individuals
and qualified employers. Section
1321(a)(1) of the ACA provides the
Secretary with general rulemaking
authority, including with respect to
setting standards for meeting the
requirements for offering QHPs through
Exchanges and such other requirements
as the Secretary determines appropriate.
In addition to the proposals in this
rule,370 CMS is considering other ways
to incorporate health equity standards
by using the Secretary’s authority to
enhance criteria for the certification of
QHPs and/or leverage existing QHP
requirements, such as the Network
Adequacy Standards at 45 CFR 156.230
and Accreditation of QHP Issuers at 45
CFR 156.275. Furthermore, CMS seeks
input on additional ways to incentivize
QHP issuers to improve health equity
and improve conditions in enrollees’
environments, as well as to address
other SDOH outside of the QHP
certification process.
CMS seeks comment from
stakeholders on advancing health equity
through QHP certification standards;
advancing CMS’s understanding of the
existing landscape of issuer collection of
health equity data; and assessing data
sources that focus on population-level
factors made available by governments,
quasi-governmental entities, data
vendors and other organizations, both
generally and with respect to the
following specifics:
• CMS seeks input on:
++ Requiring QHP issuers to obtain
the National Committee for Quality
Assurance (NCQA) Health Equity
369 https://health.gov/our-work/national-healthinitiatives/healthy-people/healthy-people-2030/
questions-answers.
370 See, for example, the proposed updated
quality standards under 45 CFR 156.1130 for QHP
issuer quality improvement strategies and
interoperability requirements under 45 CFR 156.221
for QHP issuers in the FFE to implement and
maintain a patient access application programming
interface.
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693
Accreditation in addition to their
existing accreditation requirements,
++ Other health equity assessment
tools that achieve this goal, and (3) the
challenges QHP issuers could face
implementing a new accreditation
product on health equity.371
• What demographic and/or SDOH
data do QHP issuers currently collect
from enrollees? Should QHP issuers be
required to collect demographic and
other SDOH data to help issuers gain a
better understanding of the populations
they serve, and thereby develop more
equity-focused QHPs? Which data
elements should be considered to
advance health equity within QHPs?
What are some of the challenges and
barriers to collect this data?
• What datasets related to population
factors could CMS leverage to analyze
whether QHP networks are providing
adequate access to health care services
for members within specific geographic
areas?
• What ability do QHP issuers have to
tailor provider networks based on the
health needs of enrollees in specific
geographic areas?
• What health conditions or outcome
variables should CMS analyze to
identify gaps in the health care services?
What are some of the ways that CMS
could measure QHP issuers’ progress
toward advancing health equity?
• Should CMS encourage QHP issuers
to be accountable for improving health
outcomes across all populations
equitably, while acknowledging
variations in SDOH?
• Are there ways that CMS could
incentivize QHP issuers to advance
health equity outside of the QHP
certification requirement, such as
through other federal reporting
requirements, including MLR reporting?
• What are the challenges QHP
issuers face in promoting and advancing
health equity? What are some strategies
that could overcome those challenges?
• What other health equity tools
made available by organizations should
CMS consider to address health
disparities within QHPs?
HHS further seeks to explore how
Exchanges and their constituent
organizations can more fully prepare for
the harmful impacts of climate change
on their enrollees. Since we know that
climate change causes great and growing
harm to Americans (through both
catastrophic events and chronic disease)
and since we know that it will
disproportionately harm vulnerable
populations, including those groups
subject to health disparities described
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above, HHS and CMS believe that it is
critical to study and prepare for these
dire impacts. Generally, HHS seeks
input on how Qualified Health Plans
can more effectively: (1) Determine
likely climate impacts on their enrollees
and particularly the most vulnerable
enrollees; (2) determine potential costs
of these impacts; (3) develop plans to
mitigate catastrophic and chronic
impacts for these populations (that is,
plans for resilience); and (4) take
responsibility for greenhouse gas
emission reduction across the networks
of organizations that make up their
exchanges. Specific questions include:
• Do Exchanges and issuers have a
plan to assess, reduce or mitigate its
emissions in its operations or
organizations?
• What data do Exchanges and issuers
currently collect with respect to the
climate threats faced by their enrollees
and particularly their most vulnerable
enrollees? Do they complete risk
assessments or surveys that have a
geographic or population focus?
• What types of utilization reviews
could issuers perform of medical or
prescription data to better understand
the impact of climate change events on
their enrollees?
• Do National Committee for Quality
Assurance (NCQA) health equity
requirements include reviews of climate
resilience?
• What would incentivize Exchanges
and issuers participating in those
Exchanges to more fully prepare for
climate change’s impacts on vulnerable
populations? What would incentivize
them to take action on decarbonization?
How can issuers strengthen the overall
health of their enrollees to be more
resilient to harmful climate change
events?
• Do issuers currently use, or could
they use, apps and/or AI to alert
enrollees of severe climate events and
steps to mitigate related harmful effects
(for example, extreme heat or wildfire
events)?
• What measures would be
appropriate for assessing QHP
performance on climate change and
health equity?
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
We are soliciting public comment on
each of the required issues under
section 3506(c)(2)(A) of the PRA for the
following information collection
requirements.
IV. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995 (PRA), we are required to
provide 60-day notice in the Federal
Register and solicit public comment
before a collection of information
requirement is submitted to OMB for
review and approval. This proposed
rule contains information collection
requirements that are subject to review
by OMB. A description of these
provisions is given in the following
paragraphs with an estimate of the
annual burden, summarized in Table 22.
To fairly evaluate whether an
information collection should be
approved by OMB, section 3506(c)(2)(A)
of the PRA requires that we solicit
comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
To derive wage estimates, we
generally used data from the Bureau of
Labor Statistics to derive average labor
costs (including a 100 percent increase
for fringe benefits and overhead) for
estimating the burden associated with
the ICRs.372 Table 21 in this proposed
rule presents the mean hourly wage, the
cost of fringe benefits and overhead, and
the adjusted hourly wage. As indicated,
employee hourly wage estimates have
been adjusted by a factor of 100 percent.
This is necessarily a rough adjustment,
both because fringe benefits and
overhead costs vary significantly across
employers, and because methods of
estimating these costs vary widely
across studies. Nonetheless, there is no
practical alternative, and we believe that
doubling the hourly wage to estimate
total cost is a reasonably accurate
estimation method.
A. Wage Estimates
tion Systems
r
ty Interviewers, Government
erP rammer
r & Information Systems
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372 See May 2020 Bureau of Labor Statistics,
Occupational Employment Statistics, National
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11-3021
$77.76
$77.76
$155.52
43-4061
$23.07
$23.07
$46.14
15-1121
15-1251
$47.61
$45.98
$47.61
$45.98
$95.22
$91.96
11-3021
$77.76
$77.76
$155.52
13-1041
$36.35
$36.35
$72.70
15-1257
$41.10
$41.10
$82.20
Occupational Employment and Wage Estimates.
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B. ICRs Regarding State Flexibility for
Risk Adjustment (§ 153.320)
We are proposing to generally repeal
the ability of states to request a
reduction in risk adjustment state
transfers in any state market risk pool
starting with the 2024 benefit year, with
an exception for states that previously
participated in risk adjustment state
flexibility. We propose to provide an
exception for states that previously
submitted state flexibility requests
under § 153.320(d) so that only those
states would be able to continue to
request this flexibility in 2024 and
future benefit years. We further propose
to remove as an option for a prior
participant justification and HHS
approval of a state flexibility request the
demonstration of state-specific
circumstances that warrant an
adjustment to more precisely account
for relative risk differences in the state
individual catastrophic, individual noncatastrophic, small group, or merged
market risk pool, and to retain as the
only option for state justification and
HHS approval the demonstration that
the requested reduction would have de
minimis impact on the necessary
premium increase to cover the transfers
for issuers that would receive reduced
transfer payments. This change would
also apply beginning with 2024 prior
participant benefit year requests from
prior participant states. As such, we
propose various amendments to the risk
adjustment state flexibility regulations
at § 153.320(d) to reflect the general
repeal of this flexibility, with the
exception for states that previously
participated, and to remove one of the
criteria for state justification and HHS
approval beginning with benefit year
2024 requests. The burden associated
with this requirement is the time and
effort for the state regulator to submit its
request and supporting evidence and
analysis to HHS. We estimate that
submitting the request and supporting
evidence and analysis will take a
business operations specialist 40 hours
(at a rate of $75.32 per hour) to prepare
the request and 20 hours for a senior
operations manager (at a rate of $120.90
per hour) to review the request and
transmit it electronically to HHS. We
estimate that each state seeking a
reduction will incur a burden of 60
hours at a cost of approximately
$5,430.80 per state to comply with this
reporting requirement (40 hours for the
insurance operations analyst and 20
hours for the senior manager). The
estimated burden related to submission
of these requests would be reduced as
a result of these proposed changes, since
only one state, Alabama, previously
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participated and would still be able to
request this flexibility. In the 2019
Payment Notice,373 we estimated that 25
states would submit requests and
provided a total burden of
approximately 1,500 hours across all
states, which would total $135,770
based on current wage estimates. Since
there is only one prior participating
state, we estimate that this burden will
be reduced by $130,339.20 to a total
annual cost of $5,430.80, reflecting the
burden associated with one state’s
submission. This information collection
is approved under OMB control number
0938–115, and if this proposal is
finalized, HHS would revise the
information collection under OMB
control number 0938–1155 accordingly
and provide the applicable comment
periods.
C. ICRs Regarding Distributed Data and
Risk Adjustment Data Submission
Requirements (§§ 153.610 and 153.710)
Pursuant to section 1343(b) of the
ACA, the Secretary, in consultation with
states, shall establish criteria and
methods to be used in carrying out the
risk adjustment activities under this
section. Consistent with section 1321(c)
of the ACA, the Secretary is responsible
for operating the risk adjustment
program in any state that fails to do so.
As described in § 153.610, health
insurance issuers are required to
maintain risk adjustment data in order
for HHS to operate risk adjustment on
behalf of a state. HHS employs a
distributed data approach when running
risk adjustment on behalf of a state and
uses the same data for the purpose of
determining the risk adjustment user fee
for each issuer. In this proposed rule,
we propose to collect five new data
elements from issuers’ EDGE servers
through issuers’ Edge Server Enrollment
Submission (ESES) files and risk
adjustment recalibration enrollment
files: ZIP code, race, ethnicity, ICHRA
indicator and subsidy indicator. We also
propose to extract these new data
elements as part of the enrollee-level
EDGE data beginning with the 2023
benefit year. In addition, we propose to
begin extracting three data elements
issuers already report to their EDGE
servers—plan ID, rating area and
subscriber indicator—as part of the
enrollee-level EDGE data beginning with
the 2022 benefit year.
Section 153.700(a), requires an issuer
of a risk adjustment covered plan in a
state where HHS is operating the risk
adjustment program to provide HHS,
through its dedicated distributed data
environment, access to enrollee-level
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plan enrollment data, enrollee claims
data, and enrollee encounter data as
specified by plan ID, rating area, and
subscriber indicator. Thus, the
proposals to extract these data elements
will not pose additional operational
burden to issuers, since the creation and
storage of the extract—which issuers do
not receive—is mainly handled by HHS.
Therefore, we are not proposing to
change the existing burden for the
proposal to extract plan ID, rating area,
and subscriber indicator.
For the five new data elements we
propose to collect beginning with the
2023 benefit year, we estimate that
approximately 600 issuers would be
subject to this new data collection. We
propose to collect these new data
elements via issuers’ ESES files and risk
adjustment recalibration enrollment
files. We estimate a cost of
approximately $375.28 in total labor
costs for each issuer, which reflects 4
hours of work by a management analyst
per issuer at an average hourly rate of
$93.82 per hour. The cumulative
additional cost estimate as a result of
this proposal is $225,168 for 600 issuers
(2,400 total hours per year for all
issuers). The proposals to extract these
data elements will not pose additional
operational burden to issuers, since the
creation and storage of the extract is
mainly handled by HHS. If the proposed
collection of ZIP code, race, ethnicity,
the ICHRA indicator, and the subsidy
indicator are finalized, we would revise
the information collection under OMB
control number 0938–1155 accordingly
and provide the applicable comment
periods.
D. ICRs Regarding Ability of States To
Permit Agents and Brokers and WebBrokers To Assist Qualified Individuals,
Qualified Employers, or Qualified
Employees Enrolling in QHPs
(§ 155.220)
We propose to revise
§ 155.220(c)(3)(i)(A) to include at
proposed new §§ 155.220(c)(3)(i)(A)(1)
through (5) a list of the QHP
comparative information web-broker
non-Exchange websites are required to
display consistent with § 155.205(b)(1).
We also propose to revise the disclaimer
requirement in § 155.220(c)(3)(i)(A) so
that web-broker non-Exchange websites
would be required to prominently
display a standardized disclaimer
provided by HHS stating that
enrollment support is available on the
Exchange website and provide a web
link to the Exchange website where
enrollment support for a QHP is not
available using the web-broker’s nonExchange website.
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This proposal should result in very
limited new burden for web-brokers.
The proposed new standardized
disclaimer would require web-brokers to
make minor updates to their nonExchange websites in cases where they
do not support enrollment in all
available QHPs. However, in those
cases, web-brokers would be displaying
a disclaimer much like the plan detail
disclaimer that they have historically
been required to display.
We estimate this proposal will affect
approximately 20 web-brokers based on
the number of web-brokers currently
approved by CMS and our internal
knowledge of entities that have
expressed interest in becoming webbrokers. Given the minor modifications
necessary to implement the revised
disclaimer in this proposal, we estimate
a cost of $411 in total labor costs for
each web-broker, which reflects 5 hours
of work by Web Developers and Digital
Interface Designers (15–1257) per webbroker (100 hours across all web-brokers
annually) at an average hourly rate of
$82.20. The cumulative additional cost
estimate as a result of this proposal is
$8,220 for 20 web-brokers in the 2022
benefit year. If this proposal is finalized,
we would revise the information
collection under OMB control number
0938–1349 accordingly and provide the
applicable comment periods.
We propose to amend § 155.220 to
add a proposed new paragraph
(c)(3)(i)(M) that would require webbroker websites to prominently display
a clear explanation of the rationale for
explicit QHP recommendations and the
methodology for the default display of
QHPs on their websites (for example,
alphabetically based on plan name, from
lowest to highest premium, etc.). We
believe this proposed new requirement
would provide consumers with a better
understanding of the information being
presented to them on web-broker
websites, thereby enabling them to make
better informed decisions and shop for
and select QHPs that best fit their needs.
We support web-broker websites’ use
of innovative decision-support tools for
consumers to help them shop for and
select QHPs that best fit their needs.
However, web-broker websites that
explicitly recommend or rank QHPs do
not always provide an explanation for
their recommendations or rankings.
Similarly, web-broker websites may not
include an explanation of the
methodology used for their default
displays of QHPs, and it may not
otherwise be apparent what
methodologies are used. The absence of
such explanations may cause some
consumers to misunderstand the bases
for the recommendations displayed to
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them on web-broker websites (whether
explicit or implicit), or may prevent
them from assessing the value of the
recommendations (for example, whether
a recommendation is based on the
factors most important to them). In
addition, the lack of explanations for
QHP recommendations on web-broker
websites may obscure that the webbroker is recommending QHPs based on
compensation the web-broker receives
from QHP issuers in violation of
§ 155.220(c)(3)(i)(L). For these reasons,
we propose to amend § 155.220 to add
proposed new paragraph (c)(3)(i)(M)
that would require web-broker websites
to prominently display a clear
explanation of the rationale for QHP
recommendations and the methodology
for their default display of QHPs.
This proposal should result in very
limited new costs for web-brokers, since
the information it would require they
display on their websites would only
require text-based changes that are
relatively easy to implement.
Furthermore, the extent of those textual
updates should be relatively minor in
most cases. For example, if a web-broker
is recommending a QHP based on the
fact that it has the lowest monthly
premiums for a consumer, that can
likely be communicated in one or two
sentences of informational text, or
possibly even in a single phrase or set
of short bullet points. Some web-brokers
are already providing the information
that would be required by this proposal,
and therefore would not have to make
any website updates. Other web-broker
websites do not explicitly recommend
QHPs, and therefore the impact of this
proposal would be limited to providing
similar information about the
methodology for their default display of
QHPs (for example, explaining QHPs are
sorted from lowest to highest premium,
etc.), assuming they do not already
provide that information.
We estimate this proposal will affect
approximately 20 web-brokers. Given
the minor text-based changes necessary
to implement the informational text
detailing the rationale for QHP
recommendations and the methodology
for a default display of QHPs, we
estimate a cost of $411 in total labor
costs for each web-broker, which
reflects 5 hours of work by Web
Developers and Digital Interface
Designers (15–1257) per web-broker
(100 hours across all web-brokers
annually) at an average hourly rate of
$82.20. The cumulative additional cost
estimate as a result of this proposal is
$8,220 for 20 web-brokers in the 2022
benefit year. If this proposal is finalized,
we would revise the information
collection under OMB control number
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0938–1349 accordingly and provide the
applicable comment periods.
E. ICRs Regarding Verification of
Eligibility for Special Enrollment
Periods (§ 155.420)
Since 2017, the Exchanges on the
Federal platform have implemented preenrollment special enrollment period
verification for special enrollment
period types commonly used by
consumers to enroll in coverage. We
propose to amend § 155.420 to add new
paragraph (g) to state that Exchanges
may conduct pre-enrollment eligibility
verification for special enrollment
periods at the option of the Exchange.
The Exchanges on the Federal platform
would verify special enrollment period
eligibility for the most common special
enrollment period type, loss of
minimum essential coverage. This
special enrollment period type
comprises the majority of all special
enrollment period enrollments on the
Exchanges on the Federal platform.
Since consumers on Exchanges on the
Federal platform currently must provide
eligibility verification documentation
for more special enrollment period
types, the provision would decrease
burden on consumers applying for
special enrollment period types that no
longer require pre-enrollment
verification. We expect that it takes an
individual, on average, about 1 hour to
gather and submit the relevant
documentation needed for preenrollment special enrollment period
eligibility verification. This estimate is
based on the assumption that each
individual required to submit
documentation will submit, on average,
two documents for review. It could take
significantly less time if an individual
already has the documents on hand, or
more time if the individual needs to
procure documentation from a
government agency or other source.
Based on enrollment data for
Exchanges on the Federal platform, we
estimate that HHS eligibility support
staff members would conduct preenrollment verification for 194,000
fewer individuals. We estimate that
Once individuals have submitted the
required verification documents, it
would take an Eligibility Interviewer
approximately 12 minutes (at an hourly
cost of $46.14) to review and verify
submitted verification documents. In
2017, the Exchanges on the Federal
platform expanded pre-enrollment
special enrollment period verification to
include five special enrollment period
types and estimated an annual
additional administrative burden of
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Limiting pre-enrollment verification to
one special enrollment period type
would decrease the annual
administrative burden of special
enrollment period verification. The
proposed change would result in a
decrease in annual burden for the
federal government of 38,800 hours at a
cost of $1,790,232. It would also result
in a decrease in annual burden for
consumers attesting to special
enrollment period types that no longer
require document verification of
194,000 hours.
The proposed information collection
requirements and the related burden
decrease discussed in this section will
be submitted for OMB review and
approval as part of a revision of the
information collection currently
approved under OMB control number
0938–1207 (Expiration date: February
29, 2024).375
F. ICRs Regarding General Program
Integrity and Oversight Requirements
(§ 155.1200)
We propose to add § 155.1200(e) to
permit a State Exchange to meet the
requirement to conduct an annual
independent external programmatic
audit, as described at § 155.1200(c), by
completing an audit that year under the
SEIPM audit process we propose under
Part 155, subpart P. We estimate that
there would be a burden reduction for
State Exchanges related to the
programmatic audit requirement under
§ 155.1200(c). In particular, the 18 State
Exchanges that manage their own
eligibility and enrollment platforms
would no longer be required to dedicate
resources to procure and reimburse
auditing entities for services rendered to
complete the annual independent
external programmatic audits, assuming
the State Exchanges were instead
completing the required SEIPM program
process that year. Based on industry
estimates of the average cost of
contracting an auditor to conduct an
independent external programmatic
audit, HHS estimates that the cessation
of contracting such audit entities would
result in an annual cost reduction of
approximately $90,000 for each State
Exchange, which is described in detail
in the RIA section of this rule.
Additionally, staff resources would no
longer be needed to submit the results
of the programmatic audit as a
component of the State-based
374 82
FR 18346.
Health Benefits in Alternative
Benefit Plans, Eligibility Notices, Fair Hearing and
Appeal Processes, and Premiums and Cost Sharing;
Exchanges: Eligibility and Enrollment (CMS–
10468).
375 Essential
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Marketplace Annual Reporting Tool
(SMART). This would result in a
reduction in cost and staff resources for
each State Exchange. We anticipate a
reduction in cost associated with
compiling data, summarizing the
programmatic audit results, and
submitting to CMS. State Exchanges are
required to provide the results of the
programmatic audit in a public
summary. This proposal would remove
the burden associated with reporting
requirements, which includes the
burden for a management analyst taking
3 hours (at $93.82 an hour) to pull data
into a report, the time and effort
necessary for a policy analyst taking 2
hours (at $93.82) to prepare the report
of the audit results, and the time for a
senior manager taking 1 hour (at
$155.52 an hour) to review and submit
to CMS. We estimate the burden of 6
hours at a cost of $624.62 for each State
Exchange. Therefore, the aggregate
burden for the 18 State Exchanges that
manage their own eligibility and
enrollment platforms is 108 hours at a
cost of $11,243.16.
Based on these estimates we expect
the cost reduction associated with
compiling and reporting audit data to
total $11,243.16 across all 18 State
Exchanges beginning in the 2024 benefit
year. The information collection
associated with the burden being
reduced is covered under OMB Control
Number 0938–1244. If this rule is
finalized as proposed, we would revise
the burden estimates covered under
0938–1244 before the implementation of
the SEIPM program.
We estimate this impact to take effect
in June 2024 at the earliest, which is
when the State Exchanges would
otherwise be providing completed
independent external audits as a
component of their PY 2023 SMART
submissions. There would, however, be
a corresponding new burden created to
complete the SEIPM process. For an
estimate of the burden created under
SEIPM, please refer to section 14.
We request comment on the reduction
in burden proposed, and specifically
seek feedback from State Exchanges
regarding the annual cost of the
programmatic audit process.
G. ICRs Regarding State Exchange
Improper Payment Measurement
Program (§§ 155.1500–155.1540)
1. Data Collection (§ 155.1510)
In the preamble to § 155.1510, we
explain the sampling process for each
SEIPM review cycle. In § 155.1510(a)(1),
we propose that HHS will provide State
Exchanges with the pre-sampling data
request, which State Exchanges will
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complete and return to HHS. Both the
pre-sampling data request and the
requested source data are in an
electronic format. The burden
associated with completion and return
of the pre-sampling data request would
be the time it would take each State
Exchange to interpret the requirements,
analyze and design the database queries
based on the data elements identified in
the SEIPM data request form, develop
the database queries, test the data,
perform verification and validation of
the data, and return the form to HHS.
Once the pre-sampling data request is
returned to HHS, HHS will draw the
sample for each State Exchange. In
§ 155.1510(a)(2), we propose that HHS
will provide the sampled unit data
request to the State Exchange for
completion and return to HHS. The
sampled unit data request will include
the sampled units specific to each State
Exchange. Both the sampled unit data
request and the requested source data
are in an electronic format. The burden
associated with completion and return
of the sampled unit data request would
be the time it would take each State
Exchange to interpret the requirements,
analyze and design the database queries
based on the data elements identified in
the SEIPM data request form, develop
the database queries, test the data,
perform verification and validation of
the data, and return the form to HHS.
We expect respondent costs will not
substantially vary since the data being
collected is largely in a digitized format
and that each State Exchange will be
providing information for
approximately 100 sampled units. We
do not expect reporting costs to vary
considerably based on sample size. We
seek comment on these assumptions.
We estimate completion of the presampling data request would take 12
hours per respondent at an estimated
$1,364 per respondent. We estimate
completion of the sampled unit data
request would take 707 hours per
respondent at an estimated cost of
$73,054 per respondent. To compile our
estimates, we referenced our experience
in collecting data in our FFE pilot
initiative. We identified specific
personnel and the number of hours that
would be involved in collecting the
sampled unit data broken down by
specific area (for example, eligibility
verification, auto re-enrollment,
periodic data matching, enrollment
reconciliation, plan management, and
manual reviews including document
retrieval). Additionally, to account for
the time needed for any State Exchanges
to convert hard copies to a digitized
format, we added 20 hours for each
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State Exchange into the burden
estimates.
Hourly wage rates are based on May
2020 Bureau of Labor Statistics
Occupational Codes and vary from
$45.98 (adjusted to $91.96 to account for
overhead) to $77.76 (adjusted to $155.52
to account for overhead) depending on
occupation code and function. With a
mean hourly rate of $103.50 for the
respective occupation codes, the burden
across the 18 State Exchanges equals
12,942 hours for a total cost of up to
$1,339,523. The burden related to this
information collection is being
submitted to OMB for approval with
this proposed regulation.
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2. Determination of Error Findings
Decision and Appeal Redetermination
(§§ 155.1525 and 155.1530)
As described in the preamble to
§ 155.1525, Redetermination of Error
Findings Decision, a State Exchange
may file a request with HHS to resolve
issues with HHS’ findings within the
deadline prescribed in the annual
program schedule.
The burden associated with the
information collection requirements
contained in §§ 155.1525 and 155.1530
is the time and effort necessary to draft
and submit a request for a
redetermination of an error findings
decision and, if requested, an appeal of
a redetermination decision. In
accordance with 5 CFR 1320.4,
information collected during the
conduct of an administrative action is
not subject to the PRA. As a result, we
believe the burden associated with these
requirements is exempt from the PRA
under 44 U.S.C. 3502(3)(A)(i).
3. Corrective Action Plan (§ 155.1535)
As described in the preamble to
§ 155.1535, we are proposing that State
Exchanges may be required to develop
and implement corrective action plans
following a completed SEIPM
measurement designed to reduce
improper payments as a result of
eligibility determination errors. The
burden associated with this requirement
is the time and effort put forth by State
Exchanges to develop and submit a
corrective action plan to HHS. We
estimate that it would take each selected
State Exchange up to 1,000 hours to
develop a CAP. We estimate that the
total annual burden associated with this
requirement for up to 18 State Exchange
respondents would be up to 18,000
hours. Assuming the management
analyst average hourly rate of $93.82 per
hour, we estimate that the cost of a
corrective action plan per State
Exchange could be up to $93,820, and
for all 18 State Exchanges, up to
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$1,688,760. The burden related to this
information collection will be submitted
to OMB for approval after future
rulemaking has been completed
regarding the CAP process and
requirements.
H. ICRs Regarding State Selection of
EHB-Benchmark Plan for Plan Years
Beginning on or After January 1, 2020
(§ 156.111)
We are proposing to eliminate the
requirement at § 156.111(d) and (f) to
require states to annually notify HHS in
a form and manner specified by HHS,
and by a date determined by HHS, of
any state-required benefits applicable to
QHPs in the individual or small group
market that are considered to be in
addition to EHB in accordance with
§ 155.170(a)(3) and any benefits the state
has identified as not in addition to EHB
and not subject to defrayal, describing
the basis for the state’s determination.
Under this proposal, states would no
longer be required to submit an annual
report that complies with each
requirement listed at § 156.111(f)(1)
through (6), nor would HHS identify
which benefits are in addition to EHB
for the applicable PY in the state if a
state does not submit an annual
reporting package.
As states are already required under
§ 155.170 to identify which staterequired benefits are in addition to EHB
and to defray the cost of QHP coverage
of those benefits, the 2021 Payment
Notice estimated that a majority of
states, approximately 41, would submit
annual reports and that 10 states would
not submit annual reports.376
The 2021 Payment Notice estimated
that the burden for each state to meet
this reporting requirement in the first
year would be 30 hours, with an
equivalent cost of approximately $2,459,
with a total first year burden for all 41
states of 1,230 hours and an associated
total first year cost of approximately
$100,829. Because the first year of
annual reporting was intended to set the
baseline list of state-required benefits
which states would update as necessary
in future annual reporting cycles, the
2021 Payment Notice explained that the
burden associated with each annual
reporting thereafter would be lower than
the first year. The 2021 Payment Notice
therefore estimated that for each annual
reporting cycle after the first year the
burden for each state to meet the annual
reporting requirement would be 13
hours with an equivalent cost of
approximately $1,117, with a total
annual burden for all 41 states of 533
hours and an associated total annual
376 85
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FR 29164, 29244.
Frm 00116
Fmt 4701
cost of approximately $45,817. The
average annual burden over 3 years was
estimated at approximately 765 hours
with an equivalent average annual cost
of approximately $64,154.
Given that we did not require states
to submit annual reports in 2021
pursuant to our enforcement posture in
part 2 of the 2022 Payment Notice final
rule, if finalized as proposed, repealing
the annual reporting requirement would
also remove the associated ICRs and the
anticipated burden on states submitting
such reports. Thus, if finalized as
proposed, we will request
discontinuation of the ICRs associated
with the repealed annual reporting
requirement (OMB control number:
0938–1174 Essential Health Benefits
Benchmark Plans (CMS–10448)/
Expiration date: February 29, 2024).
I . ICR Regarding Differential Display of
Standardized Options on the Websites
of Web-Brokers (§ 155.220) and QHP
Issuers (§ 156.265)
In the current rulemaking, we
consider resuming the differential
display of standardized options per the
existing authority at § 155.205(b)(1). We
also consider resuming enforcement of
the standardized options differential
display requirements for approved webbrokers and QHP issuers using a direct
enrollment pathway to facilitate
enrollment through an FFE or SBE–FP—
including both the Classic DE and EDE
Pathways—at §§ 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv), respectively.
We estimate that a total of 110 webbrokers and QHP issuers participating in
the FFEs and SBE–FPs would be
required to comply with these
requirements. We estimate that it would
take a web developer/digital interface
designer (OES occupational code 15–
1257) 2 hours annually, at an average
hourly cost of $82.20 per hour, to
implement these changes, at a total
annual cost of $164.40 per entity. We
therefore estimate a total annual burden
of 220 hours at a cost of $18,804 for all
applicable web-brokers and QHP
issuers.
Consistent with the approach
finalized in the 2018 Payment Notice,377
we continue to recognize that system
constraints may prevent web-broker and
QHP issuers from mirroring the
HealthCare.gov display. We would
therefore continue to permit webbrokers and QHP issuers that use a
direct enrollment pathway to facilitate
enrollment through an FFE or SBE–FP
to submit a request to deviate from the
display on HealthCare.gov, with
approval from HHS. Any requests from
377 See
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web-brokers and QHP issuers seeking
approval for an alternate differentiation
format would be reviewed based on
whether the same level of differentiation
and clarity is being provided under the
requested deviation as is provided on
HealthCare.gov.
We estimate that 55 of the above webbrokers and QHP issuers would submit
a request to deviate from the manner in
which standardized options are
differentially displayed on
HealthCare.gov. We estimate it would
take a compliance officer (OES
occupational code 13–1041)
approximately 1 hour annually, at a rate
of $72.70 per hour, to complete the
request to deviate from the display on
HealthCare.gov as well as the
justification for the request. We
therefore estimate a total annual burden
for all web-brokers and issuers subject
to the differential display requirements
submitting a request to deviate of
approximately $3,998.50 beginning in
2023.
To account for the burden associated
with this ICR, HHS will submit a
revised version of the existing PRA
package for Non-Exchange Entities
(under OMB control number: 0938–1329
(CMS–10633)) which was previously
discontinued on March 4, 2020. This
proposed rule serves as the initial notice
for the revised PRA package.
J. ICRs Regarding Network Adequacy
and Essential Community Providers
(§§ 156.230 and 156.235)
In this rule, HHS is proposing
amendments to § 156.230, including
adoption of standards related to time
and distance and appointment wait time
to assess QHP issuers’ fulfillment of the
reasonable access network adequacy
standard. HHS is proposing to raise the
ECP threshold from 20 percent to 35
percent. Issuers will continue to submit
provider facility information and
geographic location of participating
ECPs participating in an issuer’s
provider network or other
documentation necessary to
demonstrate that an issuer has a
sufficient number and geographic
distribution of ECPs for the intended
service areas. This is done to ensure
QHP enrollees have reasonable and
timely access to providers that serve
predominantly low-income, medically
underserved individuals in accordance
with ECP inclusion requirements found
at § 156.235.
Additionally, issuers must collect and
submit provider information necessary
to demonstrate satisfaction of time and
distance standards and appointment
wait time standards to ensure that an
issuer’s network has fulfilled the
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network adequacy reasonable access
standard found at § 156.230. Lastly, an
issuer must report the offering of
telehealth services for each provider to
help inform future development of
telehealth standards. We would provide
the definition of telehealth and ask
issuers to respond yes or no as to
whether each network provider offers
telehealth. As described in the
preamble, issuers who do not have the
information available by the time of the
QHP certification process would be able
to respond that they have requested the
information from the provider and are
awaiting the response.
HHS anticipates burden for
completing the ECP/NA template will
increase based on the changes in this
proposed rule to an estimated 20 hours
in total for each medical QHP submitted
by issuers and 4 hours in total for each
SADP submitted by issuers. This
estimate is inclusive of the requirement
to report provider facility information
and geographic location of ECPs in an
issuer’s provider network. Since we
propose to raise the ECP threshold from
20 percent to 35 percent, QHP issuers
will need to submit information on a
sufficient number of their contracted
ECPs to meet the higher threshold.378
Some issuers have previously only
included enough contracted ECPs on the
template in order to meet the current
threshold for that year’s certification
process. For those issuers, the proposed
increase in the ECP threshold would
somewhat increase burden in
completing the ECP/NA template as
they would need to include more
contracted ECPs on the template to meet
the standard. Notwithstanding, HHS
estimates that the burden associated
with showing compliance with the
increased ECP threshold will account
for 3 hours of the total 20 hours we
estimate for completing the ECP/NA
template for medical QHPs and 1 hour
of the total 4 hours we estimate for
SADPs.
The 20-hour burden estimate for the
ECP/NA template also includes burden
resulting from the requirement that QHP
issuers report information relevant to
compliance with time and distance
standards and appointment wait time
standards. For PYs 2018–2022, HHS
deferred reviews of network adequacy
for QHPs to states that HHS determined
to have a sufficient network adequacy
review process, which was all FFE
states for that time period. As HHS
resumes network adequacy reviews, we
378 The ECP/NA template requires QHP issuers to
report only that number of providers sufficient to
demonstrate compliance with relevant
requirements.
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699
are proposing to include a broader
provider specialty list for time and
distance standards than was evaluated
for PYs 2015–2017, and to add
appointment wait time standards. HHS
estimates that the burden associated
with the requirement that QHPs report
information sufficient to show
compliance with the proposed network
adequacy standards would account for
12 of the total 20 hours we estimate for
completing the ECP/NA template for
medical QHPs, and 1 hour of the total
4 hours we estimate for SADPs.
The 20-hour estimate also includes
the burden associated with the
requirement that issuers report whether
network providers provide telehealth
services. HHS believes that many QHP
issuers already collect and maintain
information on whether network
providers furnish telehealth services.
Approximately half of the parent
companies of issuers on the FFEs also
offer Medicare Advantage plans. Since
Medicare Advantage offers a telehealth
credit for network adequacy, we expect
those issuers would already have
telehealth information available for their
providers. HHS further is of the view
that those QHP issuers that do not
currently collect this information may
do so using the same means and
methods by which they already collect
information from their network
providers relevant to time and distance
standards and provider directory
information. For these reasons, HHS
estimates that any additional burden
relative to the requirement that QHP
issuers report whether each network
provider is furnishing telehealth
services would lead to a minimal
increase in burden for many issuers.
The requirement to report whether
providers offer telehealth services
would account for four of the total 20
hours we estimate for completing the
ECP/NA template for medical QHPs and
1 of the total 4 hours we estimate for
SADPs. Finally, we estimate it will take
1 hour for issuers, including both
medical QHPs and SADPs, to submit the
ECP/NA template and complete the
portions of the Issuer Module that are
relevant to these reviews.
We estimate that the total annual
burden associated with completing the
additional requirements proposed in
this rule within the ECP/NA template
for medical QHPs for up to 215 issuers
would be up to 4,300 hours. Assuming
the compliance officer average hourly
rate of $36.35 per hour, we estimate that
the cost of completing the ECP/NA
template for an individual medical QHP
could be up to $1,454, and for all 215
issuers, up to $312,610. We estimate
that the total annual burden associated
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with this requirement for SADPs for up
to 270 issuers would be up to 1,080
hours. Assuming the compliance officer
average hourly rate of $36.35 per hour,
we estimate that the cost of completing
the ECP/NA template for an individual
SADP could be up to $290.80, and for
all 270 issuers, up to $78,516. The total
estimated cost for the annual burden
associated with completing the ECP/NA
template across both medical QHP and
SADP issuers is $391,126.
HHS is submitting a new information
collection package to OMB to cover data
collection related to essential
community provider and network
adequacy requirements, which will
include the changes proposed in this
proposed rule. This proposed rule
serves as the initial notice for the PRA
package. The existing information
collection package for QHP certification
(under OMB control number: 0938–1187
(CMS–10433)/Expiration date: June 30,
2022) includes the data collection and
burden information for the ECP/NA
template, outside of what is proposed in
this rule.
K. ICRs Regarding Payment for CostSharing Reductions (§ 156.430)
In this rule, HHS is proposing several
amendments to § 156.430 to clarify that
CSR data submission is mandatory for
those issuers that received CSR
payments from HHS for any part of the
benefit year, and voluntary for other
issuers. The currently approved burden
estimate is a total cost of $235,683
(2,362.50 hours) across 150 issuers
($1,571.22 per issuer), which accounts
for 0.75 hours per issuer to complete
and submit the Issuer Summary Report
to HHS each year and 15 hours per
issuer to complete and submit the
Standard Methodology Plan and Policy
Report to HHS each year.379 We expect
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379 OMB control number 0938–1266 (CostSharing Reduction Reconciliation (CMS–10526)/
Expiration date: July 31, 2024).
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that these proposals will reduce the
burden associated with the CSR data
submission process when HHS is not
making CSR payments to QHP issuers,
as we expect that the number of issuers
submitting CSR data each year will
decrease due to these proposals. We
have revised the information collection
currently approved under OMB control
number: 0938–1266 (Cost-Sharing
Reduction Reconciliation (CMS–10526)/
Expiration date: July 31, 2024) to
account for this decreased burden when
HHS is not making CSR payments to
QHP issuers.
L. ICRs Regarding Quality Improvement
Strategy (§ 156.1130)
We are not proposing to amend
regulatory text in 45 CFR 156.1130
which outlines QIS standards
established in the 2016 Payment Notice.
The information collections associated
with QIS data collection and submission
requirements are approved under OMB
control number 0938–1286 (Quality
Improvement Strategy Implementation
Plan and Progress Report (CMS–10540)/
Expiration date: February 25, 2024) and
encompasses the estimated burden and
costs associated with a QIS submission
that may include several QIS topic
areas. In this proposed rule, we propose
that beginning in 2023, a QHP issuer
would be required to address reducing
health and health care disparities as one
of their QIS topic areas in addition to at
least one other topic area outlined in
section 1311(g)(1) of the ACA,
including: Improving health outcomes
of plan enrollees, preventing hospital
readmissions, improving patient safety
and reducing medical errors, and
promoting wellness and health. We do
not estimate additional burden to be
accounted for since the QIS submission
form currently approved under OMB
control number: 0938–1286 (Quality
Improvement Strategy Implementation
Plan and Progress Report (CMS–10540)/
PO 00000
Frm 00118
Fmt 4701
Sfmt 4702
Expiration date: February 25, 2024)
already encompasses the estimated
burden and costs associated with a QIS
submission that may include several
QIS topic areas.
M. ICRs Regarding Medical Loss Ratio
(§§ 158.140, 158.150, 158.170)
We propose to amend § 158.140 to
clarify that only those provider
incentives and bonuses that are tied to
clearly defined, objectively measurable,
and well-documented clinical or quality
improvement standards that apply to
providers may be included in incurred
claims for MLR reporting and rebate
calculation purposes. We also propose
to amend § 158.150 to specify that only
expenditures directly related to
activities that improve health care
quality may be included in QIA
expenses for MLR reporting and rebate
calculation purposes. We further
propose to make a technical amendment
to § 158.170(b) to correct an oversight
and remove the reference to the
percentage of premium QIA reporting
option described in § 158.221(b)(8),
which was deleted in part 2 of the 2022
Payment Notice final rule. We anticipate
that implementing these provisions
would require minor changes to the
MLR Annual Reporting Form
Instructions, but would not significantly
increase the associated reporting
burden. The burden related to this
information collection is currently
approved under OMB control number:
0938–1164 (Medical Loss Ratio Annual
Reports, MLR Notices, and
Recordkeeping Requirements (CMS–
10418)). The control number is
currently set to expire on July 31, 2024.
O. Summary of Annual Burden
Estimates for Proposed Requirements
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701
TABLE 22: Proposed Annual Recordkeeping and Reporting Requirements (New Burden)
§§ 153.610 and
153.710
155.220
155.1510
155.1535
§§ 156.230 and
156.235
§§ 155.220 and
156.265
§§ 155.220 and
156.265
Total
0938-1155
600
600
4
2,400
0938-1349
0938-NEW
0938-NEW
0938-NEW
20
18
18
485
40
18
18
485
5
719
1,000
20
200
12,942
18,000
5,380
$16 440
$1,339,523
$1,688,760
$391,126
$16 440
$1,339,523
$1,688,760
$391,126
0938-1329
55
55
1
55
$3,998.50
$3,998.50
0938-1329
110
110
2
220
$18,804
$18,804
1,751
39,197
$3,683,819.50
$3,683,819.50
-$130 339.20
-$1790232
-$11 243.16
-$45 817
-$130 339.20
-$1790232
-$11 243.16
-$45 817
$1,977,631.3
6
$1,977,631.3
6
0938-1207
0938-1244
0938-1174
n>lO
18
41
.2
6
13
79.2
0
0
Total
-38 800
-108
-533
-40,881
VerDate Sep<11>2014
20:01 Jan 04, 2022
Jkt 253001
Data and Risk Adjustment Data
Submission Requirements (§§ 153.610
and 153.710), the proposal on General
Program Integrity and Oversight
Requirements (§ 155.1200), will be
submitted for PRA approval outside of
this rulemaking, through a separate
Federal Register notice.
The proposals for Quality
Improvement Strategy (§ 156.1130),
Medical Loss Ratio (§§ 158.140, 158.150,
158.170), and Payment for Cost-Sharing
Reductions (§ 156.430) contain
information collections which are
covered by existing PRA packages. One
proposal, the State Selection of EHBBenchmark Plan for Plan Years
Beginning on or After January 1, 2020
(§ 156.111), proposes to discontinue the
associated information collections and
remove them from the PRA package,
and the information collection in the
Determination of Error Findings
Decision and Appeal Redetermination
PO 00000
Frm 00119
Fmt 4701
Sfmt 4702
(§§ 155.1525 and 155.1530) proposal is
exempt from the PRA.
P. Submission of PRA-Related
Comments
We have submitted a copy of this
proposed rule to OMB for its review of
the rule’s information collection and
recordkeeping requirements. These
requirements are not effective until they
have been approved by the OMB.
To obtain copies of the supporting
statement and any related forms for the
proposed collections discussed above,
please visit CMS’s website at https://
www.cms.gov/regulations-andguidance/legislation/
PaperworkReductionActof1995, or call
the Reports Clearance Office at 410–
786–1326.
We invite public comments on these
potential information collection
requirements. If you wish to comment,
please submit your comments
electronically as specified in the
E:\FR\FM\05JAP2.SGM
05JAP2
EP05JA22.039</GPH>
This proposed rule includes several
proposals, including information
collection requests for which we seek to
use this rulemaking as the Federal
Register notice through which to receive
comment on their proposed revisions to
or submissions of PRA packages. These
proposals include Verification of
Eligibility for Special Enrollment
Periods (§ 155.420), Data Collection and
Corrective Action Plans related to the
SEIPM Program(§ 155.1510, 155.1535),
and the proposals on Network
Adequacy and Essential Community
Providers (§§ 156.230 and 156.235) and
the proposal regarding Differential
Display of Standardized Options
(§§ 155.220) and 156.265).
The following proposals with
associated information collection
requests, including the proposal
regarding State Flexibility for Risk
Adjustment (§ 153.320), the proposal
regarding risk adjustment Distributed
EP05JA22.038</GPH>
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*This proposal estimates a decrease in annual burden for consumers attesting to special enrollment period types that no longer
require document verification, because the number of consumers enrolling through a loss of minimum essential coverage is
represented as n> 10 since the number is undefined.
702
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ADDRESSES section of this proposed rule
and identify the rule (CMS–9911–P), the
ICR’s CFR citation, CMS ID number, and
OMB control number.
ICR-related comments are due March
7, 2022.
V. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this proposed rule, and, when we
proceed with a subsequent document,
we will respond to the comments in the
preamble to that document.
VI. Regulatory Impact Analysis
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A. Statement of Need
This rule proposes standards related
to the risk adjustment program for the
2023 benefit year and beyond, as well as
standards for the HHS–RADV program
beginning with the 2021 benefit year.
This rule proposes additional standards
related to eligibility redetermination,
special enrollment periods,
requirements for agents, brokers, webbrokers, and issuers assisting consumers
with enrollment through Exchanges that
use the Federal platform; state selection
of EHB-benchmark plan and annual
reporting of state-required benefits,
termination of coverage, the MLR
program, and 2023 FFE and SBE–FP
user fees. This rule also proposes to
remove the annual reporting
requirement on states to report staterequired benefits to HHS. In addition, it
proposes to reinstate nondiscrimination
provisions related to sexual orientation
and gender identity. The rule also
proposes to refine the EHB
nondiscrimination framework by
including examples of presumptively
discriminatory cases. The rule also
proposes to require issuers in FFEs and
SBE–FPs to offer standardized options.
This rule proposes to expand QIS
standards and require QHP issuers to
address health and health care
disparities in their QIS submissions in
addition to at least one other topic area
outlined in section 1311(g)(1) of the
ACA. Finally, this proposed rule would
implement the PIIA requirements for
State Exchanges.
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B. Overall Impact
We have examined the impacts of this
rule as required by Executive Order
12866 on Regulatory Planning and
Review (September 30, 1993), Executive
Order 13563 on Improving Regulation
and Regulatory Review (January 18,
2011), the Regulatory Flexibility Act
(RFA) (September 19, 1980, Pub. L. 96–
354), section 202 of the Unfunded
Mandates Reform Act of 1995 (March
22, 1995, Pub. L. 104–4) and Executive
Order 13132 on Federalism (August 4,
1999).
Executive Orders 12866 and 13563
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. A
regulatory impact analysis (RIA) must
be prepared for rules with economically
significant effects ($100 million or more
in any one year).
Section 3(f) of Executive Order 12866
defines a ‘‘significant regulatory action’’
as an action that is likely to result in a
rule: (1) Having an annual effect on the
economy of $100 million or more in any
one year, or adversely and materially
affecting a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
state, local or tribal governments or
communities (also referred to as
‘‘economically significant’’); (2) creating
a serious inconsistency or otherwise
interfering with an action taken or
planned by another agency; (3)
materially altering the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or (4)
raising novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order. An RIA
must be prepared for major rules with
economically significant effects ($100
million or more in any one year), and
a ‘‘significant’’ regulatory action is
subject to review by OMB. HHS has
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Fmt 4701
Sfmt 4702
concluded that this rule is likely to have
economic impacts of $100 million or
more in at least 1 year. Based on HHS
estimates, OMB’s Office of Information
and Regulatory Affairs has determined
this rulemaking is ‘‘economically
significant’’ as measured by the $100
million threshold. In accordance with
the provisions of Executive Order
12866, this regulation was reviewed by
the Office of Management and Budget.
The provisions in this proposed rule
aim to ensure that consumers continue
to have access to affordable coverage
and quality health care. Although there
is still some uncertainty regarding the
net effect on premiums, we anticipate
that the provisions of this proposed rule
would help further HHS’ goal of
ensuring that all consumers have access
to quality and affordable health care and
are able to make informed choices. In
accordance with Executive Order 12866,
HHS believes that the benefits of this
regulatory action justify the costs.
C. Impact Estimates of the Payment
Notice Provisions and Accounting Table
In accordance with OMB Circular A–
4, Table 24 depicts an accounting
statement summarizing HHS’
assessment of the benefits, costs, and
transfers associated with this regulatory
action.
This proposed rule implements
standards for programs that will have
numerous effects, including providing
consumers with access to affordable
health insurance coverage, reducing the
impact of adverse selection, and
stabilizing premiums in the individual
and small group health insurance
markets and in an Exchange. We are
unable to quantify all benefits and costs
of this proposed rule. The effects in
Table 24 reflect qualitative assessment
of impacts and estimated direct
monetary costs and transfers resulting
from the provisions of this proposed
rule for health insurance issuers and
consumers. The annual monetized
transfers described in Table 24 include
changes to costs associated with the risk
adjustment user fee paid to HHS by
issuers and the potential increase in
rebates from issuers to consumers due to
proposed amendments to MLR
requirements.
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We are proposing the risk adjustment
user fee of $0.22 PMPM for the 2023
benefit year to operate the risk
adjustment program on behalf of states,
which we estimate to cost
approximately $60 million in benefit
year 2023.380 We expect risk adjustment
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380 As noted previously in this proposed rule, no
state has elected to operate the risk adjustment
program for the 2023 benefit year; therefore, HHS
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user fee transfers from issuers to the
federal government to remain steady at
$60 million, the same as estimated for
the 2022 benefit year; this is included in
Table 24.
Additionally, for 2023, we are
proposing maintaining the FFE and the
SBE–FP user fee rates at current levels,
will operate the program for all 50 states and the
District of Columbia.
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703
2.75 and 2.25 percent of premiums,
respectively.
For our proposed implementation of
the State Exchange Improper Payment
Measurement program, we estimate
record keeping costs for data collection
and corrective action plan development
and implementation to be
approximately $3.0 million annually
beginning in PY 2023.
BILLING CODE 4120–01–P
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TABLE 24: Accountin2 Table
Benefits:
Qualitative:
Increased access to health insurance coverage for individuals who are currently unable to enroll in
coverage because of past-due premiums.
Greater market stability resulting from updates to the risk adjustment models.
Increased access to health insurance coverage due to the proposal to decrease the scope of special
enrollment period verification.
Greater protection of individuals in the LGBTQI+ cmmnunity from discrimination on the basis of their
sexual orientation and gender identity.
Greater consistency in protections based on EHB nondiscrimination
Potential direct benefit of reducing improper payments, with secondary effects including a boost of insurer
confidence in State Exchanges through implementation of the proposed State Exchange Improper
Payment Measurement program.
• Increased access to more comprehensive provider netwmks and enhanced health equity381 due to
the network adequacy and ECP proposals which would better ensure that individuals have
reasonable, timely access to an adequate number, type, and distribution of providers and facilities
to manage their health care needs.
• Enhanced access to behavioral health providers who provide key services for vulnerable
populations via the network adequacy and ECP proposals
Greater access to primary care and OB/GYN providers in recognition of the importance of preventive care
for underserved populations through the network adequacy and ECP proposals
Encourage continuous quality improvement among QHP issuers to help strengthen health care systemwide efforts to improve health outcomes, lower costs, and advance health equity.
Costs:
Estimate
-$97.7 Million
-$98.9 Million
Discount
Rate
7 oercent
3 percent
Period
Covered
2022-2026
2022-2026
Quantitative:
Record.keeping costs incurred by State Exchanges as detailed in the Collection of Infonnation
Requirements section, related to SEIPM data collection and corrective action plan development and
implementation estimated to be approximately $3.0 million annually beginning in 2023.
Reduction in costs for states related to annual reporting of state-required benefits, estimated to be onetime savings of $100,829 in 2022 and annual savings of $45,817 each year thereafter.
Reduction in potential costs to Exchanges since they would not be required to conduct random sampling
as a verification process for enrollment in or eligibility for employer-based insurance when the Exchange
reasonably expects that it will not obtain sufficient verification data, estimated to be one-time savings of
$49.5 million in 2022 and annual savings of$113 million in2023 and onwards.
Increased costs to Exchanges to design a risk-based verification process for enrollment in or eligibility for
employer sponsored coverage based on a risk assessment for inappropriate subsidy payments estimated to
be about $4. 7 million in one-time costs in 2022.
Annual cost savings of $5.2 million related to the proposal to decrease the scope of special enrollment
period verification beginning in 2023.
•
Reduction of $130,339.20 in reporting costs across states participating in risk adjustment associated
with repealing the ability of states to request a reduction in risk adjustment state transfers in any state
market risk pool starting with the 2024 benefit year.
Cumulative additional cost estimate for the collection of five new data elements for risk adjustment
estimated to be approximately $225,168 for 600 issuers, or $375.28 per issuer annually, beginning in
2023.
Increased cost to 10 State Exchanges to implement system builds to prorate APTC and premium amounts,
as proposed. Estimated $10,000,000in one-time costs for State Exchanges in the 2024 benefit year.
Increased cost to web-brokers to implement minor text-based changes to their websites to add or modify a
disclaimer. Estimated $8,220 in one-time costs for 20 web-brokers in the 2022 benefit year.
•
Increased cost to web-brokers to implement minor tex1:-based changes to their websites to add textbased explanations for how they display QHPs. Estimated $8,220 in one-time costs for 20 webbrokers in the 2022 benefit year.
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Annualized Moneti7.ed ($/year)
Year
Dollar
2021
2021
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
•
•
705
Increased annual cost of $18,804 across all web- brokers and QHP issuers utilizing the Classic DE
and EDE Pathways to comply with the standardized options differential display requirements in the
2023 benefit year.
Increased annual cost of $3,998.50 across the subset of web-brokers and issuers subject to the
differential display requirements submitting a request to deviate from the requirements beginning in
the 2023 benefit year.
•
Increased cost to issuers for completing the updated ECP/NA template that includes a longer
provider specialty list for network adequacy, appointment wait time standards, and a question on
providers offering telehealth. The total estimated annual burden for medical QHP and SADP
issuers to complete the updated ECP/NA template is $391,126 beginning in PY 2023.
• Estimated Reduction in cost of $1,631,243.16 beginning in the 2024 benefit year to State
Exchanges associated with new standards for completing external audits under 155. 1200. This
total reflects a reduction of roughly $11,000 for audit data collection and reporting, and a
reduction of roughly $1.6 million for annual audit firm contracts across all State Exchanges.
Qualitative:
Potential reduction in costs and increased access to coverage to enrollees who are currently unable to
enroll in coverage because of past-due premiums related to searching for a new plan from another issuer
when seeking to enroll in health care coverage.
Potential increased costs of coverage of medical services for health insurance issuers (if health insurance
enrollment increases).
Potential administrative burden on State Exchanges due to SEIPM program.
Potential administrative burden on states and regulated entities that would need to take action to come into
compliance with the updated nondiscrimination policies (for example, regulated entities under§ 156.125).
Potential administrative burden on states if they choose to align their network adequacy standards with the
new federal standards (instead of having HHS complete the reviews).
Transfers:
Estimate
Annualized Monetized ($/year)
$1.125 Billion
$1.150 Billion
Year
Dollar
2021
2021
Discount
Rate
7 percent
3 percent
Period
Covered
2022-2026
2022-2026
BILLING CODE 4120–01–C
This RIA expands upon the impact
analyses of previous rules and utilizes
the Congressional Budget Office’s (CBO)
analysis of the ACA’s impact on federal
381 Healthy People 2030 defines health equity as
‘‘the attainment of the highest level of health for all
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spending, revenue collection, and
insurance enrollment. Table 25
summarizes the effects of the risk
adjustment program on the federal
budget from fiscal years 2023 through
2027, with the additional, societal
effects of this proposed rule discussed
in this RIA. We do not expect the
people.’’ https://health.gov/our-work/national-
health-initiatives/healthy-people/healthy-people2030/questions-answers.
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Quantitative:
• Federal Transfers to Consumers: Increase inPTC payments estimated to be approximately $1.32
billion in 2023, $1.41 billion in 2024, $1.43 billion in 2025, and $1.44 billion in 2026.
Other Transfers: Increase in rebate payments from issuers to consumers due to the clarification regarding
the reporting of provider incentives and bonuses and the removal of indirect expenses from QIA in MLR
and rebate calculations estimated to be $61.8 million annually, beginning in 2023.
Qualitative:
Potential transfers from issuers who would have been able to recoup unpaid premiums from enrollees to
those enrollees who would now be able to enroll in coverage from the same issuer or another issuer in the
same controlled group without having to pay past-due premiums.
• Potential transfer from consumers to issuers: An estimated two percent premium increase for
individuals not eligible for PTC due to the proposal to require individual market silver QHPs to
provide an AV between 70-72 percent and associated income-based CSR plan variations to
follow a de minimis range of+ 1/0 (impact on approximately 248,000 enrollees in
HealthCare.gov silver plans below 70 percent AV, with approximately 4.2 million enrollees in
corresponding CSR plan variations).
706
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
provisions of this proposed rule to
significantly alter CBO’s estimates of the
budget impact of the premium
stabilization programs that are described
in Table 25.
In addition to utilizing CBO
projections, HHS conducted an internal
analysis of the effects of its regulations
on enrollment and premiums. Based on
these internal analyses, we anticipate
that, quantitatively, the effects of the
provisions proposed in this rule are
consistent with our previous estimates
in the 2022 Payment Notice for the
impacts associated with the APTCs, the
premium stabilization programs, and
FFE (including SBE–FP) user fee
requirements.
TABLE 25: Estimated Federal Government Outlays and Receipts for the Risk Adjustment
and Reinsurance Pro rams from Fiscal Year 2023-2027, in billions of dollars382
Risk Adjustment and Reinsurance
Pro m Pa ments
Risk Adjustment and Reinsurance
Pro
Collections
6
6
6
7
7
32
6
6
7
7
7
33
1. Guaranteed Availability of Coverage
(§ 147.104(i))
This proposed rule proposes
amendments to § 147.104(i), which
would reverse the policy allowing an
issuer to attribute a premium payment
made for new coverage to any past-due
premiums owed for coverage from the
same issuer or another issuer in the
same controlled group within the prior
12-month period preceding the effective
date of coverage before effectuating
enrollment in new coverage. Under
current rules, individuals may have to
pay up to 3 months of past-due
premiums plus a binder payment before
enrolling in coverage.383 CMS lacks
information on the frequency with
which consumers miss payments or the
frequency with which binder payments
are currently being made, and seeks data
or information related to past-due
premiums. CMS is also interested in
learning more about the population and
characteristics of individuals with pastdue premiums.
Individuals often stop making
premium payments or forgo health
insurance because they are unable to
afford the premium payments. In a 2019
survey, 42 percent of insured adults
reported being worried about paying for
their monthly health insurance
premium, with 18 percent being ‘‘very
worried’’ and 24 percent being
‘‘somewhat worried’’.384 In addition, 28
percent of insured adults reported
having a difficult time covering the cost
of health insurance each month. In
2019, 73.7 percent of uninsured adults
pointed to high cost of coverage as the
reason for being uninsured.385
Based on internal analysis, we
estimate that approximately 7.8 percent
of enrollees in Exchanges using the
Federal platform had their coverage
terminated in 2020 for non-payment of
premiums. That figure was 10.7 percent
in 2019, 12.4 percent in 2018, and 17.3
percent in 2017.386 Among those
enrollees who had their coverage
terminated in 2019 and lived in an area
where their issuer (or a different issuer
in the same controlled group) had plans
available the next year, we estimate that
16.9 percent enrolled with the same
issuer (or a different issuer in the same
controlled group) the following year.
That figure was 16.5 percent in 2018
and 16.8 percent in 2017.387 For those
enrollees with household incomes
below the federal poverty level, 15.3
percent of enrollees who had their
coverage terminated in 2019 and lived
in an area where their issuer (or a
different issuer in the same controlled
group) was available the next year
enrolled with the same issuer (or a
different issuer in the same controlled
group) the following year.388 That figure
was 13.5 percent in 2018 and 13.2
percent in 2017. Our analysis also
suggests that those enrollees with lower
household incomes (specifically,
household incomes below the federal
poverty level) were less likely to enroll
in coverage from the same issuer or
another issuer in the same controlled
group the following year. In 2017, 2018,
and 2019, those enrollees who were less
than 35 years old were also less likely
to enroll in coverage from the same
issuer or another issuer in the same
controlled group the following year than
those aged 35 to 54.
Due to data limitations, we are unable
to directly attribute any changes in
enrollment behavior in the Exchanges
using the Federal platform to the
interpretation of the guaranteed
availability requirement stated in the
Market Stabilization final rule.
However, this proposed rule would
382 Reinsurance collections ended in FY 2018 and
outlays in subsequent years reflect remaining
payments, refunds, and allowable activities.
383 Section 156.270(d) requires issuers to observe
a 3-consecutive month grace period before
terminating coverage for those enrollees who upon
failing to timely pay their premiums are receiving
APTC. Section 155.430(d)(4) requires that when
coverage is terminated following this grace period,
the last day of enrollment in a QHP through the
Exchange is the last day of the first month of the
grace period. Therefore, individuals whose coverage
is terminated at the conclusion of a grace period
would owe at most 1 month of premiums, net of
any APTC paid on their behalf to the issuer.
Individuals who attempt to enroll in new coverage
while in a grace period (and whose coverage has not
yet been terminated) could owe up to 3 months of
premiums, net of any APTC paid on their behalf to
the issuer.
384 Kirzinger, Ashley et al., Data Note: Americans’
Challenges with Health Care Costs, KFF, June 11,
2019. https://www.kff.org/health-costs/issue-brief/
data-note-americans-challenges-health-care-costs/.
385 Tolbert, J. and Orgera, K., Key Facts about the
Uninsured Population, KFF, November 6, 2020.
https://www.kff.org/uninsured/issue-brief/key-factsabout-the-uninsured-population/.
386 The annual figures presented in this section
should not necessarily be interpreted as trends, as
some states moved from Exchanges using the
Federal platform to State Exchanges and the overall
composition of the dataset may have changed.
387 As we reported in the April 18, 2017 Federal
Register (82 FR 18346), that figure was
approximately 16 percent in 2016.
388 Of the 936,637 enrollees who had their
coverage terminated in 2019 and lived in an area
where their issuer (or a different issuer in the same
controlled group) was available the next year,
24,784 (or 2.6 percent) had incomes below the
federal poverty level. Many, but not all, of these
enrollees lived in states that did not expand
Medicaid eligibility following the implementation
of the ACA.
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Note: Risk adjustment program payments and receipts lag by one quarter. Receipt will fully offset payments over time.
Source: Congressional Budget Office. Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2020 to 2030
Table A-2. September 29, 2020. Available at https://www.cbo.gov/system/files/2020-09/56571-federal-healthsubsidies.pdf.https://www.cbo.gov/system/files/2020-09/56571-federal-health-subsidies.pdf.
Federal Register / Vol. 87, No. 3 / Wednesday, January 5, 2022 / Proposed Rules
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increase access to health insurance
coverage for individuals who stop
paying premiums due to reasons such as
financial hardship or affordability and
who are currently unable to enroll in
coverage because they cannot afford to
pay past-due premiums. This increased
access could lead to better health
outcomes, if these individuals are able
to maintain coverage.389 This proposed
rule would also increase the ability for
enrollees to access coverage with the
same issuer in the next year. This would
be of particular benefit to those
Exchange enrollees living in counties
with only one or two participating
issuers.390 It could also reduce the costs
and burden to enrollees related to
searching for a new plan from another
issuer when seeking to enroll in health
care coverage. Being able to enroll with
the same issuer would also allow
individuals to have access to the same
network of services and providers,
which could improve continuity of care.
This policy could result in transfers
from issuers who would have been able
to recoup unpaid premiums from
enrollees to those enrollees who would
now be able to enroll in coverage from
the same issuer or another issuer in the
same controlled group without having
to pay past-due premiums. However, we
anticipate that these transfers would be
minimal, as issuers are not permitted to
waive past-due premiums and would be
expected to pursue other means of
collecting them.
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
389 We request comment on whether there would
be any impact on premiums, affordability, and
access for the individuals who reliably pay. We are
interested in comments regarding whether issuers
who implemented policies requiring payment of
past due premiums prior to reenrollment
experienced declines in administrative costs related
to the collection of past-due premiums.
390 According to recent figures from KFF, in 2021,
there were only two issuers participating in the
ACA Exchanges in 44 percent of counties, and there
was only one issuer participating in the ACA
Exchanges in 10 percent of counties. Source:
McDermott, Daniel and Cynthia Cox (2020).
‘‘Insurer Participation on the ACA Marketplaces,
2014–2021.’’ KFF, November 23. https://
www.kff.org/private-insurance/issue-brief/insurerparticipation-on-the-aca-marketplaces-2014-2021/;
This was noted by Sandy Ahn and JoAnn Volk in
their analysis of the previous interpretation of the
guaranteed availability requirement. Reference:
Ahn, Sandy and JoAnn Volk (2017). ‘‘Relaxing the
Affordable Care Act’s Guaranteed Issue Protection:
Issues for Consumers and State Options.’’ CHIRblog,
June 2. https://chirblog.org/relaxing-the-affordablecare-acts-guaranteed-issue-protection-issues-forconsumers-and-state-options/.
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707
2. Nondiscrimination Based on Sexual
Orientation and Gender Identity
(§§ 147.104(e), 155.120(c), 155.220(j),
156.125(b), 156.200(e), and
156.1230(b)), and EHB
Nondiscrimination Policy for Health
Plan Designs (§ 156.125)
Many of the entities regulated by
§§ 147.104(e), 155.120(c), 155.220(j),
156.125(b), 156.200(e), and 156.1230(b)
may have previously incorporated the
proposed nondiscrimination protections
related to sexual orientation and gender
identity into their operations in
response to the inclusion of these
protections in these regulations prior to
the effective date of the June 19, 2020
rulemaking on section 1557 that
eliminated the references to these
protections from these regulations.
These regulated entities may have
incurred any administrative costs at that
time. We do not anticipate coming into
compliance with these proposed
changes would substantially impose
administrative costs on any regulated
entities that did not subsequently revise
nondiscrimination policies based on the
2020 section 1557 final rule. Although
costs may be incurred by any regulated
entities that did subsequently revise
nondiscrimination policies in response
to the removal of such protections from
the affected regulations based on the
2020 section 1557 final rule, we believe
such costs are justified in light of the
potential significant benefits the
proposed changes could provide to
individuals in the LGBTQI+
community, by ensuring they are not
subject to discrimination on the basis of
their sexual orientation or gender
identity.
The EHB nondiscrimination policy
proposals in this rulemaking will most
likely impact the vast majority of state
EHB-benchmark plans. If the
nondiscrimination policy proposals
become final, issuers subject to
§ 156.125 and states subject to the
standards under § 156.125 through the
cross-reference at § 156.111(b)(2)(v) will
most likely need to take action to come
into compliance with the updated
nondiscrimination policies, and states
may choose to provide guidance to
assist issuers in doing so. The actions
necessary to come into compliance with
the updated nondiscrimination policies
will likely impact and minimally
increase premiums (for example,
Colorado 2023 EHB-benchmark plan 391
noted a minimal increase to premiums
with the updated benefits). States have
the flexibility to design their EHBbenchmark plans consistent with
§ 156.111, which provides more options
in plan designs. We note that several
states have already used this flexibility
to update their EHB-benchmark plans.
CMS provides states with greater
flexibility to select their EHBbenchmark plans by providing three
new options for selection in PY 2020
and beyond, including: (1) Selecting the
EHB-benchmark plan that another state
used for PY 2017, (2) replacing one or
more categories of EHBs under its EHBbenchmark plan used for PY 2017 with
the same category or categories of EHB
from the EHB-benchmark plan that
another state used for PY 2017, or (3)
otherwise selecting a set of benefits that
would become the state’s EHBbenchmark plan. Under each of these
three options, the new EHB-benchmark
also must comply with additional
requirements, including scope of
benefits requirements, under
§ 156.111(b).392
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
391 See for example, Colorado 2023 EHB
Benchmark Plan Actuarial Report: Suite of Genderaffirming care benefits to treat gender dysphoria
resulted cost estimate was 0.04% of the total
allowed claims assuming utilization would be for
adults. https://www.cms.gov/CCIIO/Resources/
Data-Resources/ehb.
392 Section 156.111(b). https://www.ecfr.gov/
current/title-45/subtitle-A/subchapter-B/part-156.
393 See current burden estimates in the
Supporting Statement of OMB control number
0938–1155 (Standards Related to Reinsurance, Risk
Corridors, and Risk Adjustment (CMS–10401)),
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3. Risk Adjustment (§§ 153.320,
153.610, 153.620, 153.700, 153.710, and
153.730)
Beginning with the 2023 benefit year,
we propose the following model
specification changes to the HHS risk
adjustment models: (1) To add a twostage weighted model specification to
the adult and child risk adjustment
models, (2) to remove the existing
severity illness factors in the adult
models and add interacted HCC counts
factors to the adult and child risk
adjustment models, and (3) to revise the
enrollment duration factors for the adult
models. By prioritizing simplicity and
limiting the number of changes to the
current model structure, we minimize
administrative burden for HHS, and as
HHS runs risk adjustment in all 50
states and the District of Columbia, we
do not expect these policies to place
additional burden on state governments.
These proposed model specifications
would result in limited changes to the
number and type of risk adjustment
model factors; therefore, we do not
expect these changes to impact issuer
burden beyond the current burden for
the risk adjustment program.393 To
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further assist issuers in understanding
the potential impact of these changes on
risk adjustment transfers, we released
the 2021 RA Technical Paper and
conducted an EDGE transfer simulation
that estimated the impact on risk scores
and transfers with and without these
proposed changes using 2020 benefit
year risk adjustment data.394 Based on
results from this simulation, we
estimate the impact of these policies on
risk adjustment transfers to be relatively
minor.395
Additionally, we propose to
recalibrate the HHS risk adjustment
models for the 2023 benefit year using
the 2017, 2018, and 2019 enrollee-level
EDGE data. We believe that the
approach of blending (or averaging) 3
years of separately solved coefficients
will provide stability within the risk
adjustment program and minimize
volatility in changes to risk scores from
the 2022 benefit year to the 2023 benefit
year. We also propose to continue
applying a market pricing adjustment to
the plan liability associated with
Hepatitis C drugs in the risk adjustment
models, consistent with the approach
adopted beginning with the 2020
models. For the 2023 benefit year, we
propose to recalibrate the models using
the final, fourth quarter (Q4) RXC
mapping document that was applicable
for the 2018 and 2019 benefit year, with
the exception of the 2017 enrollee-level
EDGE data year, for which we propose
to use the most recent RXC mapping
document that was available when we
first processed the 2017 enrollee-level
EDGE data (that is, Q2 2018) for
consistency with prior model year
recalibrations, as we did not include
RXCs in the adult risk adjustment
models until 2018.396 For the 2024
benefit year and beyond, we propose to
recalibrate the models using the final,
fourth quarter (Q4) RXC mapping
document that was applicable for each
which is currently being updated. The previous
version of the Supporting Statement is available at
https://www.reginfo.gov/public/do/
PRAViewDocument?ref_nbr=201712-0938-015.
394 See the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes,
available at https://www.cms.gov/files/document/
2021-ra-technical-paper.pdf and the HHS-Operated
Risk Adjustment Technical Paper on Possible
Model Changes: Summary Results for Transfer
Simulations, available at https://www.cms.gov/
CCIIO/Programs-and-Initiatives/PremiumStabilization-Programs. Issuers that participated in
the simulation also received detailed issuer-specific
data, including risk score and transfer estimates for
the simulated results.
395 We estimate that the impact of the model
specification changes between the proposed and
final 2022 benefit year risk adjustment models in
total absolute value change in transfer over
premium is –0.3 in the individual marker and –0.2
in the small group market.
396 See 81 FR at 94075.
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benefit year of data that is included in
the current year’s model recalibration.
We also propose to continue to apply a
pricing adjustment for Hepatitis C drugs
for all three model types (adult, child,
and infant), as well as outline our
consideration for targeted removal of the
mapping of hydroxychloroquine sulfate
to RXC 09 (Immune Suppressants and
Immunomodulators) and the related
RXC 09 interactions for the 2018 and
2019 benefit years’ enrollee-level EDGE
data used for model recalibration,397 as
well as our consideration for the
targeted removal of the mapping of
Descovy® to RXC 01 ((Anti-HIV Agents)
from all three benefit year datasets used
for model recalibration. For the 2023
benefit year, we are proposing to
maintain the CSR adjustment factors
finalized in the 2019–2022 Payment
Notices. Overall, we do not estimate that
these changes will impact issuer burden
beyond the current burden for the HHSoperated risk adjustment program.
For the 2023 benefit year, HHS will
operate a risk adjustment program in
every state and the District of Columbia.
As described in the 2014 Payment
Notice, HHS’ operation of risk
adjustment on behalf of states is funded
through a risk adjustment user fee. For
the 2023 benefit year, we propose to use
the same methodology that we finalized
in the 2022 Payment Notice to estimate
our administrative expenses to operate
the program. Risk adjustment user fee
costs for the 2023 benefit year are
expected to remain steady from the
prior 2022 benefit year estimates.
However, we project a small increase in
billable member months in the
individual and small group markets
overall in the 2023 benefit year based on
the enrollment increases observed in the
2020 benefit year. We estimate that the
total cost for HHS to operate the risk
adjustment program on behalf of states
for 2023 will be approximately $60
million, and therefore, the proposed risk
adjustment user fee would be $0.22
PMPM. Because overall risk adjustment
costs estimated for the 2023 benefit year
are similar to 2022 costs, we do not
expect the proposed risk adjustment
user fee for the 2023 benefit year to
materially impact the transfer amounts
collected or paid by issuers of risk
adjustment covered plans.
We also propose to generally repeal
the ability for states to request a
reduction in risk adjustment state
transfers of up to 50 percent in all state
market risk pools beginning with the
397 The same concerns were not present for the
2017 enrollee-level EDGE data because
hydroxychloroquine sulfate was not included in the
RXC crosswalk until 2018.
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2024 benefit year, with an exception for
prior participants. We propose to
provide an exception for states that have
previously submitted risk adjustment
state flexibility requests, so only such
states may continue to request this
flexibility beginning with the 2024
benefit year. We also propose to remove
as a criterion for state justification and
HHS approval of these requests the
demonstration of state-specific factors
that warrant an adjustment to more
precisely account for relative risk
differences in the State individual
catastrophic, individual noncatastrophic, small group, or merged
market risk pool. As proposed, we
would retain as the sole requirement for
state justification and criterion for HHS
approval the demonstration that the
requested reduction would have a de
minimis impact on the necessary
premium increase to cover the transfers
for issuers that would receive reduced
transfer payments beginning with the
2024 benefit year.
We anticipate that the proposed
changes to risk adjustment state
flexibility requests would have a
minimal impact on states and other
interested parties. Only one state,
Alabama, has requested a reduction in
risk adjustment state transfers since this
flexibility was first made available
beginning in the 2020 benefit year, and
under this proposal, Alabama would be
considered a prior participant and could
continue to request such reductions. We
do not anticipate any new burden or
costs as a result of this policy.
We also propose to collect and extract
five new data elements from issuers’
EDGE servers through issuers’ Edge
Server Enrollment Submission (ESES)
files and risk adjustment recalibration
enrollment files: ZIP code, race,
ethnicity, subsidy indicator, and ICHRA
indicator beginning with the 2023
benefit year. In addition, we propose to
begin extracting three data elements
issuers already report to their EDGE
servers—plan ID, rating area and
subscriber indicator—as part of the
enrollee-level EDGE data beginning with
the 2022 benefit year. The proposal to
extract plan ID, rating area, and
subscriber indicator will pose minimal
burden on issuers (only the burden
associated with running of a command)
since the creation and storage of the
extract—which issuers do not receive—
is mainly handled by HHS. For the
collection of the five new data elements
we propose to collect and extract
beginning with the 2023 benefit year,
the cumulative additional cost estimate
is $225,168 for 600 issuers. We estimate
that the addition of these five new data
elements to the risk adjustment data
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submission requirements would be
$375.28 per issuer. The proposal to
extract these data elements will pose
minimal burden on issuers (only the
burden associated with running of a
command) since the creation and
storage of the extract—which issuers do
not receive—is mainly handled by HHS.
We expect minimal costs to HHS as a
result of these proposals.
We also propose to amend § 153.730
to clarify that in situations where the
April 30 deadline for issuers to submit
risk adjustment data to HHS in states
where HHS is operating the risk
adjustment program falls on a nonbusiness day, the deadline for issuers to
submit the required data would be the
next applicable business day. We
believe this proposal would not pose
additional burden since it does not
change any of the data submission
requirements and only clarifies the
deadline when April 30 falls on a nonbusiness day.
We seek comment on estimated costs
and transfers and potential benefits
associated with these provisions.
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4. Risk Adjustment Data Validation
(§§ 153.350 and 153.630)
In this proposed rule, we propose
updates to the HHS–RADV error rate
calculation methodology beginning with
the 2021 benefit year to (1) extend the
application of Super HCCs from their
current application only in the sorting
step that assigns HCCs to failure rate
groups to broader application
throughout the HHS–RADV error rate
calculation processes, (2) specify that
Super HCCs will be defined separately
according to the age group model to
which an enrollee is subject, and (3)
constrain to zero any negative failure
rate outlier in a failure rate group,
regardless of whether the outlier issuer
has a negative or positive error rate.
Although we anticipate the proposed
changes will have a small impact on
issuers’ HHS–RADV risk adjustment
transfer adjustments, risk adjustment is
a budget neutral program and we expect
these proposals to refine the HHS–
RADV error rate calculation
methodology will not have an impact on
the administrative burden to issuers
subject to the current HHS–RADV
process because HHS is responsible for
calculating error rates and applying
error rates to adjust risk scores and state
market risk pool transfers. Furthermore,
we expect these changes will have
minimal impacts on administrative
costs to the federal government as the
described changes do not impact the
underlying HHS–RADV data, the
amount of data HHS collects, or the
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SVA, which is conducted by an entity
HHS retains.
We seek comment on these burden
estimates.
5. Agents, Brokers, and Web-Brokers
(§ 155.220)
a. Required QHP Comparative
Information on Web-Broker Websites
and Related Disclaimer
We propose to amend
§ 155.220(c)(3)(i)(A) to include at
proposed new §§ 155.220(c)(3)(i)(A)(1)
through (c)(3)(i)(A)(5) a list of the QHP
comparative information web-broker
non-Exchange websites are required to
display consistent with § 155.205(b)(1).
We also propose to revise the disclaimer
requirement in § 155.220(c)(3)(i)(A) so
that web-broker non-Exchange websites
would be required to prominently
display a standardized disclaimer
provided by HHS stating that
enrollment support is available on the
Exchange website and provide a web
link to the Exchange website where
enrollment support for a QHP is not
available using the web-broker’s nonExchange website.
In the preamble of part 2 of the 2022
Payment Notice final rule, we
announced our intention to enforce the
requirement that web-brokers display
the QHP comparative information
described under § 155.205(b)(1)
beginning with the PY 2022 open
enrollment period.398 Specifically, we
propose to create proposed new
§§ 155.220(c)(3)(i)(A)(1) through (5) to
list premium and cost-sharing
information, the summary of benefits
and coverage established under section
2715 of the PHS Act, identification of
the metal level of the QHP as defined by
section 1302(d) of the ACA or whether
it is a catastrophic plan as defined by
section 1302(e) of the ACA, the results
of the enrollee satisfaction survey as
described in section 1311(c)(4) of the
ACA, quality ratings assigned in
accordance with section 1311(c)(3) of
the ACA, and the provider directory
made available to the Exchange in
accordance with § 156.230 as the
minimum QHP comparative information
web-broker non-Exchange websites
must display for all available QHPs.
Including this information within
§ 155.220, instead of through a crossreference to § 155.205(b)(1), would
provide better clarity and ease of
reference and establish a list of required
QHP comparative information
consistent with our current enforcement
398 See Patient Protection and Affordable Care
Act; HHS Notice of Benefit and Payment Parameters
for 2022 and Pharmacy Benefit Manager Standards;
Final Rule, 86 FR 24140 at 24206 (May 5, 2021).
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709
approach, which, as discussed above,
does not require the display of MLR
information and transparency of
coverage measures.
We propose to revise
§ 155.220(c)(3)(i)(A) to state that webbroker websites must disclose and
display the following QHP information
provided by the Exchange or directly by
QHP issuers consistent with the
requirements of § 155.205(c), and to the
extent that enrollment support for a
QHP is not available using the webbroker’s website, prominently display a
standardized disclaimer provided by
HHS stating that enrollment support for
the QHP is available on the Exchange
website, and provide a web link to the
Exchange website.
These proposals should result in very
limited new burden for web-brokers. As
we explained in Section III of the
preamble, given CMS’s current
enforcement policies relative to these
requirements, the QHP comparative
information we propose to require webbroker websites to display is consistent
with current requirements. As a result,
this proposed requirement would not
present new burden to web-brokers.
The proposed new disclaimer would
require web-brokers to make minor
updates to their websites in cases when
they do not support enrollment in all
available QHPs. However, in those
cases, they would be displaying a
standardized disclaimer much like the
plan detail disclaimer that they have
historically been required to display.
We estimate this proposal will affect
approximately 20 web-brokers. Given
the minor modifications necessary to
implement the revised disclaimer in this
proposal, we estimate a cost of $411 in
total labor costs for each web-broker,
which reflects 5 hours of work by Web
Developers and Digital Interface
Designers (15–1257) per web-broker
(100 hours across all web-brokers
annually) at an average hourly rate of
$82.20. The cumulative additional cost
estimate as a result of this proposal is
$8,220 for 20 web-brokers in the 2022
benefit year.
We seek comment on the estimated
burden associated with these proposals.
b. Prohibition of QHP Advertising on
Web-Broker Websites
Section 155.220(c)(3)(i)(L) prohibits
web-broker non-Exchange websites from
displaying QHP recommendations based
on compensation an agent, broker, or
web-broker receives from QHP issuers.
We propose to amend
§ 155.220(c)(3)(i)(L) to make clear that
web-broker non-Exchange websites are
also prohibited from displaying QHP
advertisements, or otherwise providing
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favored or preferred placement in the
display of QHPs, based on
compensation agents, brokers, or webbrokers receive from QHP issuers.
This proposal should impose no new
costs on web-brokers so long as they are
not displaying QHP advertisements on
their websites. We believe that very few
web-brokers are currently doing so.
However, for those few web-brokers that
are displaying QHP advertisements on
their websites, they would be required
to update their websites to remove those
advertisements and would lose any
advertising revenue associated with
such placements. Since advertisements
on websites are inherently subject to
change, even for those web-brokers that
would be required to make updates to
their websites if this proposal is
finalized, the costs may be very limited,
although we request comment on this
assumption and acknowledge that there
may be loss of advertising revenue. We
also realize, to the extent advertising
revenue is lost, web-brokers may seek to
recoup the lost revenue from other
sources resulting in a transfer of costs.
For example, web-brokers may seek to
increase fees received from agents and
brokers using their websites or may
pursue increased commissions from
QHP issuers.
We seek comment on the potential
costs, benefits, and transfers associated
with this proposal.
c. Explanation of Rationale for QHP
Recommendations on Web-Broker
Websites
We propose to amend § 155.220 to
add a proposed new paragraph
(c)(3)(i)(M) that would require webbroker websites to prominently display
a clear explanation of the rationale for
explicit QHP recommendations and the
methodology for the default display of
QHPs on their websites (for example,
alphabetically based on plan name, from
lowest to highest premium, etc.). We
believe this proposed new requirement
would provide consumers with a better
understanding of the information being
presented to them on web-broker
websites, thereby enabling them to make
better informed decisions and shop for
and select QHPs that best fit their needs.
We support web-broker websites’ use
of innovative decision-support tools for
consumers to help them shop for and
select QHPs that best fit their needs.
However, web-broker websites that
explicitly recommend or rank QHPs do
not always provide an explanation for
their recommendations or rankings.
Similarly, web-broker websites may not
include an explanation of the
methodology used for their default
displays of QHPs, and it may not
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otherwise be apparent what
methodologies are used. The absence of
such explanations may cause some
consumers to misunderstand the bases
for the recommendations displayed to
them on web-broker websites (whether
explicit or implicit), or may prevent
them from assessing the value of the
recommendations (for example, whether
a recommendation is based on the
factors most important to them). In
addition, the lack of explanations for
QHP recommendations on web-broker
websites may obscure that the webbroker is recommending QHPs based on
compensation the web-broker receives
from QHP issuers in violation of
§ 155.220(c)(3)(i)(L). For these reasons,
we propose to amend § 155.220 to add
proposed new paragraph (c)(3)(i)(M)
that would require web-broker websites
to prominently display a clear
explanation of the rationale for QHP
recommendations and the methodology
for its default display of QHPs.
This proposal should result in very
limited new costs for web-brokers, since
the information it would require they
display on their websites would only
require text-based changes that are
relatively easy to implement.
Furthermore, the extent of those textual
updates should be relatively minor in
most cases. For example, if a web-broker
is recommending a QHP based on the
fact that it has the lowest monthly
premiums for a consumer, that can
likely be communicated in one or two
sentences of informational text, or
possibly even in a single phrase or set
of short bullet points. Some web-brokers
are already providing the information
that would be required by this proposal,
and therefore would not have to make
any website updates. Other web-broker
websites do not explicitly recommend
QHPs, and therefore the impact of this
proposal would be limited to providing
similar information about the
methodology for their default display of
QHPs (for example, explaining QHPs are
sorted from lowest to highest premium,
etc.), assuming they do not already
provide that information.
We estimate this proposal will affect
approximately 20 web-brokers. Given
the minor text-based changes necessary
to implement the informational text
detailing the rationale for QHP
recommendations and the methodology
for a default display of QHPs, we
estimate a cost of $411 in total labor
costs for each web-broker, which
reflects 5 hours of work by Web
Developers and Digital Interface
Designers (15–1257) per web-broker
(100 hours across all web-brokers
annually) at an average hourly rate of
$82.20. The cumulative additional cost
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estimate as a result of this proposal is
$8,220 for 20 web-brokers in the 2022
benefit year.
We seek comment on the potential
costs and benefits associated with this
proposal.
d. Providing Correct Information to the
FFEs and Prohibited Business Practices
These proposed revisions to
§ 155.220(j)(2) are focused on addressing
various areas where HHS has thus far
identified a need for more direct and
clear guidance, including ensuring that
correct consumer information is entered
onto Exchange applications. This
includes contact information, such as
the consumer’s email address, telephone
number, and mailing address, as well as
information related to projected
consumer household income. They also
set forth prohibited business practices,
such as using automation when
interacting with CMS Systems or the DE
Pathways without CMS’ advance
written approval and failing to properly
identity proof Exchange applicants.
These proposed changes will clarify
HHS’ expectations in these areas, and
create clear, enforceable standards and
bases for taking enforcement action for
violations of these requirements.
HHS believes these proposals would
not impose any burden on any of the
parties the proposals would impact,
including agents, brokers, and webbrokers. None of these proposals
propose to impose new requirements.
Rather, these proposals are intended to
address common problems that HHS has
observed, and provide clear, enforceable
standards intended to protect
consumers and support the efficient
operation of Exchanges by substantially
reducing the occurrence of those
problems.
We seek comment on any potential
costs or benefits associated with these
proposals.
6. Verification Process Related to
Eligibility for Insurance Affordability
Programs (§ 155.320)
We propose to amend § 155.320(d)(4)
to remove the requirement that
Exchanges that do not reasonably expect
to obtain sufficient verification data
related to enrollment in or eligibility for
employer sponsored coverage conduct
random sampling to verify whether an
applicant is eligible for or enrolled in an
eligible employer sponsored plan in
favor of a verification process that is
based on risk for inappropriate APTC/
CSRs. We believe this proposal would
benefit employers, employees,
Exchanges using the Federal platform,
and State Exchanges that operate their
own eligibility and enrollment platform,
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as this proposal would relieve them
from the burden of investing resources
to conduct and respond to random
sampling, as applicable.
In the 2019 Payment Notice final rule,
we discussed a study that HHS
conducted in 2016 and the burden
associated with sampling based in part
on the alternative process used for the
Exchanges.399 HHS incurred
approximately $750,000 in costs to
design and operationalize this study,
and the study indicated that $353,581 of
APTC was potentially incorrectly
granted to individuals in the sampled
population who inaccurately attested to
their enrollment in or eligibility for a
qualifying eligible employer sponsored
plan. We placed calls to employers to
verify 15,125 cases but were only able
to verify 1,948 cases. A large number of
employers either could not be reached
or were unable to verify a consumer’s
information, resulting in a verification
rate of approximately 13 percent. The
sample size involved in the 2016 study
did not represent a random sample of
the target population and did not fulfill
all regulatory requirements for sampling
under § 155.320(d)(4)(i).
Taking additional costs into
account—namely, the cost of sending
notices to employees as required under
§ 155.320(d)(4)(i)(A), the cost of
building the infrastructure and
implementing the first year of
operationalizing this process, and the
cost of expanding the number of cases
to a random sample size of
approximately 1 million cases—we
estimate that the overall one-time cost of
implementing sampling would have
been approximately $8 million for the
Exchanges using the Federal platform,
and between $2 million and $7 million
for other Exchanges, depending on their
enrollment volume and existing
infrastructure. Therefore, we estimate
that the average per-Exchange cost of
implementing sampling that resembles
the approach taken by the Exchanges
using the Federal platform would have
been approximately $4.5 million for
State Exchanges that operate their own
eligibility and enrollment platform, for
a total cost of $67.5 million for the 15
State Exchanges that operate their own
eligibility and enrollment platform
(operating in 14 states and the District
of Columbia). However, we are aware
that 4 State Exchanges that operate their
own eligibility and enrollment platform
have already incurred costs to
implement sampling and estimate that
they have incurred one-time costs of
approximately $4.5 million per
399 See https://www.govinfo.gov/content/pkg/FR2017-11-02/pdf/2017-23599.pdf, p. 51128.
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Exchange with a total of $18 million and
will only experience savings related to
recurring costs. Therefore, the one-time
savings for Exchanges using the Federal
platform and the remaining State
Exchanges that operate their own
eligibility and enrollment platform will
be approximately $49.5 million.
We estimate the annual costs to
conduct sampling on a random sample
size of approximately 1 million cases to
be approximately $8 million for the
Exchanges using the Federal platform
and $7 million on average for each State
Exchange that operates its own
eligibility and enrollment platform. This
estimate includes operational activities
such as noticing, inbound and outbound
calls to the Marketplace call center, and
adjudicating consumer appeals. The
total annual cost to conduct sampling
would have been $105 million for 15
State Exchanges. Therefore, the total
annual cost for the Exchanges using the
Federal platform and the 15 State
Exchanges that operate their own
eligibility and enrollment platform
would have been $113 million in 2022
and onward.
Eliminating these estimated costs
would be offset by the costs of designing
and implementing an appropriate
verification process. We estimate that
the cost to conduct research for
Exchanges using the Federal platform to
be approximately $295,000 and for the
15 State Exchanges that operate their
own eligibility and enrollment platform
to be approximately $4.4 million. In
addition to significant cost savings, this
proposal would provide more flexibility
for states to design and implement a
verification process for employer
sponsored coverage that is tailored to
their unique populations, and would
protect the integrity of states’ respective
individual markets. Furthermore, we
believe that this proposal would reduce
burden on employers and employees, as
compliance with the current random
sampling, notification, and information
gathering processes require significant
time and resources, which likely would
be reduced if this proposal is finalized.
HHS requests comment on the
estimated and potential costs and
impacts of this proposal.
7. Proration of Advance Premium Tax
Credit and Premium (§§ 155.240(e),
155.305(f)(5), and 155.340)
HHS is proposing amendments to part
155, specifically at §§ 155.240(e),
155.305(f)(5), and 155.340 to establish
the requirement that all Exchanges
prorate both premiums and APTCs for
enrollees enrolled in a particular policy
for less than the full coverage month,
including when the enrollee is enrolled
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711
in multiple policies within a month,
each lasting less than the full coverage
month using a specified methodology.
In line with calculating PTC according
to the provisions at 26 CFR 1.36B–3,
this method of administering APTC
would reduce instances of payments of
APTC in excess of an applicable
taxpayer’s monthly PTC for a month in
which an enrollee is enrolled for less
than a full calendar month and thus
would protect the applicable taxpayer
from incurring income tax liability due
to excess APTC.
This would benefit both issuers and
enrollees by preventing APTC
overpayment and eliminating wasted
resources dedicated to resolving
overpayment issues. While the FFEs and
SBE–FPs already prorate APTC and
premium amounts, State Exchanges do
not currently prorate consistently the
amount of applied APTC administered
to issuers in their applicable states.
HHS acknowledges that those State
Exchanges that do not currently prorate
APTC or premium amounts will be
financially impacted by the proposed
requirement to implement this
methodology, and this proposal will
likely require operational systems
builds to support this new proration
requirement.
Based on historical cost data for SBEs
to implement changes to their IT
systems and operations related to
premium processing functionality and
similar functionality, such as
functionality for processing consumer
failures to reconcile APTC received for
a previous plan year, HHS estimates that
State Exchanges that currently do not
implement proration of APTC or
premium amounts according to the
proposed methodology could expect to
incur one-time implementation costs.
HHS anticipates that each affected State
Based Exchange that does not already
prorate APTC or premium amounts
according to the proposed methodology
would expect an estimated $1 million
one-time burden to account for the IT
build to support the new calculation
and reporting systems associated with
this requirement.
HHS estimates that 8 State Exchanges
currently prorate premium amounts but
do not prorate APTC amounts. HHS
anticipates that those State Exchanges
which already prorate premium
amounts will have the operational and
systems capacity to calculate the
prorated premium and APTC amounts
as required in this proposed policy.
Currently, State Exchanges vary in
their approaches to implementing the
proposed APTC and premium proration.
In order to provide the most
conservative estimate of this proposal’s
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burden, HHS assumes that 10 State
Exchanges, including State Exchanges
that newly transitioned to being State
Exchanges by the time of this
rulemaking, will incur the highest level
of implementation cost detailed earlier
in this proposed rule ($1 million in onetime implementation burden per State
Exchange) for a total estimated impact
of $10,000,000 in the 2024 benefit year
across all State Exchanges. HHS seeks
comment on the estimated costs and
benefits described in this section.
10. Special Enrollment Periods—Special
Enrollment Period Verification
(§ 155.420)
We are proposing to amend § 155.420
to add new paragraph (g) to state that
Exchanges may conduct pre-enrollment
verification of eligibility for special
enrollment periods, at the option of the
Exchange, and that Exchanges may
provide an exception to pre-enrollment
special enrollment period verification
for special circumstances. Exchanges on
the Federal platform would conduct
pre-enrollment special enrollment
period eligibility verification for new
consumers who attest to losing
minimum essential coverage.
We do not anticipate that revisions to
§ 155.420 would impose regulatory
burden or costs on the Exchanges on the
Federal platform because these
Exchanges will decrease the number of
special enrollment period types that
require pre-enrollment verification to
only include special enrollment periods
for new consumers who attest to losing
minimum essential coverage. The
provisions proposed in this rule would
decrease the scope of pre-enrollment
special enrollment period verification in
all states with Exchanges served by the
Federal platform. We anticipate that this
would result in 194,000 fewer
individuals having their enrollment
delayed or ‘‘pended’’ annually until
eligibility verification is completed,
which would result in a $5,150,700
decrease in annual ongoing costs to the
federal government.
There may be State Exchanges that
also decide to reduce the scope of their
current pre-enrollment special
enrollment period verification, which
would also decrease annual ongoing
costs for State Exchanges. State
Exchanges that are currently conducting
pre-enrollment verification of eligibility
for more special enrollment period
types than those that the Exchanges on
the Federal platform would be verifying
under this proposal could experience a
decrease in burden and costs if they
choose to align their approaches with
the Exchanges on the Federal platform.
State Exchanges that are currently
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conducting pre-enrollment verification
of eligibility for fewer types of special
enrollment periods than the proposed
special enrollment period that the
Exchanges on the Federal platform
would be verifying under this proposal
could experience an increase in burden
and costs if they choose to align with
the Exchanges on the Federal platform,
but State Exchanges will not be required
to align with the Exchanges on the
Federal platform.
We do not anticipate that this would
increase administrative costs on QHP
issuers. Additionally, our data suggests
that SEP documentation deters younger,
likely healthier individuals from
enrolling, but there could be an increase
in claims costs to QHP issuers since the
Exchanges on the Federal platform will
be requiring document submission prior
to enrollment for fewer special
enrollment period types.
We seek comment on the potential
costs, benefits, and transfers associated
with this proposal.
11. General Program Integrity and
Oversight Requirements (§ 155.1200)
We propose to add new § 155.1200(e)
to permit a State Exchange to meet the
requirement to conduct an annual
independent external programmatic
audit, as described at § 155.1200(c), by
completing the annual, required SEIPM
program process. As a result, we
estimate that there would be a general
reduction in reporting and contracting
costs to State Exchanges related to
meeting auditing requirements under
§ 155.1200. We anticipate the combined
cost in contracting and reporting would
result in an average annual reduction of
approximately $90,624.62 for each State
Exchange beginning in benefit year
2024. The total cost annual reduction
across 18 State Exchanges would be
approximately $1,631,243.16. Any new
costs, burdens, and benefits to State
Exchanges of meeting requirements for
the SEIPM program are described later
in this proposed rule.
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
12. State Exchange Improper Payment
Measurement Program (§§ 155.1500
Through 155.1540)
The implementation of the SEIPM
program could have the direct effect of
reducing improper payments.
Measuring the error rate of State
Exchange Premium Tax Credit
payments will reveal vulnerable
processes to be corrected.
Recordkeeping costs of $3.0 million
annually will begin in 2023.
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We seek comment on the estimated
costs and benefits and potential
transfers associated with this provision.
13. FFE and SBE–FP User Fees
(§ 156.50)
We are proposing an FFE user fee rate
of 2.75 percent of monthly premiums for
the 2023 benefit year, which is the same
as the 2.75 percent FFE user fee rate
finalized in part 3 of the 2022 Payment
Notice.400 We also propose an SBE–FP
user fee rate of 2.25 percent for the 2023
benefit year, which is the same as the
2.25 percent SBE–FP user fee rate
finalized in part 3 of the 2022 Payment
Notice. Therefore, we do not believe
that these proposed user fee rates will
have any additional impact on
premiums compared to the 2022 benefit
year. We also propose to amend § 156.50
to conform the user fee regulations with
the repeal of the Exchange DE option
finalized in part 3 of the 2022 Payment
Notice.401 As this proposal does not
alter existing policy, we do not expect
that it will have any additional
regulatory impact.
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
14. State Selection of EHB-Benchmark
Plan for Plan Years Beginning on or
After January 1, 2020 (§ 156.111)
We are proposing to eliminate the
requirement at § 156.111(d) and (f) to
require states to annually notify HHS in
a form and manner specified by HHS,
and by a date determined by HHS, of
any state-required benefits applicable to
QHPs in the individual or small group
market that are considered to be in
addition to EHB in accordance with
§ 155.170(a)(3) and any benefits the state
has identified as not in addition to EHB
and not subject to defrayal, describing
the basis for the state’s determination.
Under this proposal, states would no
longer be required to submit an annual
report that complies with each
requirement listed at § 156.111(f)(1)
through (6), nor would HHS identify
which benefits are in addition to EHB
for the applicable PY in the state if a
state does not submit an annual
reporting package.
The 2021 Payment Notice
acknowledged that requiring states to
annually report to HHS would require
that states submit additional paperwork
to HHS on an annual basis but noted
that, as states are already required under
§ 155.170 to identify which staterequired benefits are in addition to EHB
and to defray the cost of those benefits,
400 86
401 86
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We are proposing to change the de
minimis range for levels of coverage at
§ 156.140(c) to a variation of +2/¥2
percentage points for all standard
bronze plans, gold plans, platinum
plans, individual market off-Exchange
silver plans, and all small group market
silver plans (on- and off-Exchange), as
well as proposing to change the de
minimis for expanded bronze plans to
+5/¥2, that are required to comply with
AV standards for PYs beginning in 2023.
In addition, we are proposing to change
the de minimis under § 156.200 to
+2/0 percentage points for individual
market silver QHPs and for the incomebased silver CSR plan variations under
§ 156.400 to +1/0.
In the 2017 Market Stabilization
rule,403 we acknowledged that in the
short run, expanding the standard de
minimis range to +2/¥4 would generate
a transfer of costs from consumers to
issuers in the form of decreased APTC
and increased premiums, but stated our
belief that the additional flexibility for
issuers would have positive effects for
consumers over the longer term as
premiums stabilized, issuer
participation increased, and coverage
2024
2025
2026
2027
2028
2029
2030
2031
2032
0.77
0.76
0.77
0.78
0.81
0.83
0.86
0.91
FR 29164, 29252.
Protection and Affordable Care Act;
Market Stabilization, 82 FR 18346 (April 18, 2017).
403 Patient
15. Levels of Coverage (Actuarial Value)
(§ 156.140, 156.200, 156.400)
options at the silver level and above
increased, which would attract more
young and healthy enrollees into such
plans. As discussed above, since we
finalized the expanded de minimis
ranges, we have observed decreased
enrollment in silver plans (from 963,241
enrollees in PY 2018 to 424,345
enrollees in PY 2021), despite the
number of standard silver plans
available on HealthCare.gov steadily
increasing from 811 silver plans in PY
2018 to 1,386 silver plans in PY 2021.
Thus, we cannot justify the decreased
APTC with evidence of increased
enrollment of younger and healthier
enrollees in silver plans.
Changing the de minimis ranges for
standard metal level plans would
generate a transfer of costs from the
government and issuers to consumers in
the form of increased APTC and
decreased premiums, because narrowing
the de minimis range for silver plans
can affect the generosity of the SLCSP.
The SLCSP is the benchmark plan used
to determine an individual’s PTC. A
subsidized enrollee in any county that
has a SLCSP that is currently below 70
percent AV would see the generosity of
their current SLCSP increase, resulting
in an increase in PTC. Not all counties
would see the SLCSP change as a result
of this proposal. In states using
HealthCare.gov, approximately 87
percent of counties across 23 states have
a SLCSP that is below 70 percent AV.
For this proposal, the CMS Office of
the Actuary estimates a nationwide
increase in PTCs through PY 2032, as
shown in Table 26:
0.76
This proposal would impact those
consumers currently enrolled in
standard silver plans that are currently
in the ¥4 to ¥0.01 percent de minimis
range that would be out of compliance
under this proposal, as well as
consumers currently enrolled in
individual market silver QHPs that are
currently in the ¥4 to ¥0.01 percent de
minimis range and associated incomebased CSR silver plan variations
402 85
of QHP coverage of state-required
benefits in addition to EHB is an
independent statutory requirement from
the annual reporting policy finalized at
§ 156.111(d) and (f).
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
currently enrolled in the ¥1 to ¥0.01
percent de minimis range. Of the plans
on HealthCare.gov, we estimate that
there are approximately 150,000
enrollees in gold plans below 78 percent
AV, and 3,500 enrollees in platinum
plans below 88 percent AV.404
Additionally, we estimate there are
approximately 248,000 enrollees in
HealthCare.gov silver QHPs below 70
percent AV, with approximately 4.2
million enrollees in corresponding
income-based CSR plan variations.
Under these proposals, those enrollees
would need to select a different plan for
PY 2023 if the issuer chooses to
discontinue the plan rather than revise
the plan’s cost sharing. Additionally,
these proposals would similarly affect
enrollees in such plans that are not
available on HealthCare.gov, such as
plans sold on state Exchanges, for which
Available at https://www.govinfo.gov/content/pkg/
FR-2017-04-18/pdf/2017-07712.pdf.
404 There are no enrollees in bronze plans below
58% AV.
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any such burden experienced by states
would be minimal.402 The 2021
Payment Notice also stated that this
reporting requirement would be
complementary to the process the state
should already have in place for
tracking and analyzing state-required
benefits. The 2021 Payment Notice
further explained that states may opt not
to report this information and instead
let HHS make this determination for
them. In the 2021 Payment Notice, we
also discussed that any state burden
associated with this policy would be
limited to the completion of the HHS
templates, validation of that
information, and submission of the
templates to HHS. Repealing the annual
reporting requirement would remove
the burden associated with that policy,
detailed in 2021 Payment Notice and
summarized previously in the
Collection of Information Requirements
section in this proposed rule.
Although this proposal would relieve
states of the annual reporting
requirements and any associated burden
with submission and validation of the
information on the annual reporting
templates, it would not pend or
otherwise impact the defrayal
requirements under section
1311(d)(3)(B) of the ACA, as
implemented at § 155.170. Under this
proposal, states remain responsible for
making payments to defray the cost of
additional required benefits and issuers
are still responsible for quantifying the
cost of these benefits and reporting the
cost to the state. We also note that the
obligation for a state to defray the cost
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we do not have data to make an
informed estimate.
We estimate the premiums for these
plans would increase approximately 2
percent on average because of benefit
changes required for plans to meet a +2/
0 de minimis threshold. However, for
Exchange enrollees, we expect this
premium increase to be substantially
offset by the corresponding increase in
PTC because of the proposal’s impact on
the SLCSP. Similarly, the proposal to
change the de minimis range for CSR
variants to +1/0 would lead to improved
cost-sharing due to the higher relative
AV compared to the current +1/¥1
range, along with increased gross
premiums that would be substantially
offset by increased PTC payments. After
implementation of the ARP enhanced
financial subsidies, subsidized enrollees
make up the majority of HealthCare.gov
silver QHP enrollees—only 91,000 of
approximately 248,000 individual
market silver QHP enrollees in plans
with AV between 66.00 and 69.99
percent plan AV remain unsubsidized.
By comparison, enrollment within the
corresponding income-based silver CSR
variations of the above silver QHPs has
increased to approximately 4.2 million.
We expect the increased PTC payments
due to the premium increase to
incentivize healthier subsidy-eligible
enrollees to participate in the
Marketplace, and that the improved risk
pool as a result of increased healthier
enrollees would mitigate the net cost
burden of covering a decreasing
population of unsubsidized enrollees.
In addition, changing the de minimis
range for standard silver plans would
impact ICHRAs, which use the Lowest
Cost Silver Plan (LCSP) as the
benchmark to determine whether an
ICHRA is considered affordable to an
employee. Under this proposal, as silver
plans become more generous and
premiums increase, an employer would
have to contribute more to an ICHRA to
have it be considered affordable. This
change could discourage large employer
use of ICHRAs because large employers
need to offer affordable coverage to
satisfy the employer shared
responsibility provisions.405
Additionally, if coverage is considered
unaffordable to the employee, the
employee can opt out of the ICHRA and
instead purchase coverage on the
Exchange with APTC, if otherwise
eligible; and increasing the LCSP
premiums could make employersponsored coverage unaffordable to
more employees. We estimate silver
plans with an AV below 70 percent will
405 See section 4980H of the Code; 26 CFR
54.4980H–1—26 CFR 54.4980H–6.
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see premiums increase approximately 2
percent on average due to more
generous benefits. We do not believe
this will have a significant impact on
the number of employers willing to offer
ICHRAs or whether an ICHRA is
considered affordable to most
employees, but invite comment to refute
or refine this understanding on these
issues in particular.
We seek comment on the estimated
costs, benefits, and transfers associated
with this provision.
16. Standardized Options (§ 156.201)
Section 156.201 would require QHP
issuers to offer standardized QHP
options. Though these proposed
requirements would necessitate the
creation of new plans, HHS believes the
burden imposed on issuers would be
minimal because these new plans’
benefits, networks, and formularies
would not differ substantially from the
benefits, networks, and formularies of
plans that issuers currently offer and
because HHS is specifying the cost
sharing parameters, MOOPs, and
deductibles for these new plans.
Additionally, HHS would design these
standardized options to resemble the
most popular QHPs in the individual
market FFEs and SBE–FPs in PY 2021,
making these standardized options
comparable to plans that the majority of
issuers already offer. Furthermore, since
HHS proposes to require QHP issuers to
offer standardized options at every
product network type, metal level, and
throughout every service area that they
also offer non-standardized QHPs (but
not at different product network types,
metal levels, and service areas that they
do not also offer non-standardized
QHPs), issuers would not be required to
extend plan offerings beyond their
existing service areas.
Additionally, since HHS does not
propose to limit the number of nonstandardized QHP options that issuers
can offer in PY 2023, HHS believes the
majority of enrollees will remain
enrolled in their current nonstandardized options. Moreover, since
HHS does not propose to require issuers
to offer a higher number of QHPs than
what they currently offer, issuers would
still be able to determine how many
QHPs they wish to offer. As a result,
HHS does not expect the total number
of plans that issuers will offer to change
substantially subsequent to the
imposition of requirement. Thus,
though these new plans would have to
be submitted for approval, certification,
and display, we expect that the overall
burden for issuers and states alike
would not substantially increase
because we do not expect the number of
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overall plan offerings to substantially
increase—due in part to issuers
discontinuing some old plans.
As noted earlier in the preamble, HHS
is considering resuming the differential
display of standardized options per the
existing authority at § 155.205(b)(1).
HHS would assume burden for the
differential display of standardized
options on HealthCare.gov, meaning
FFE and SBE–FP issuers would not be
subject to this burden. In addition, as
noted above in the preamble, HHS is
considering resuming enforcement of
the standardized options display
requirements for approved web-brokers
and QHP issuers using a direct
enrollment pathway to facilitate
enrollment through an FFE or SBE–FP—
including both the Classic DE and EDE
Pathways—at §§ 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv), respectively.
HHS believes that resuming
enforcement of these differential display
requirements will not require significant
modification of these entities’ platforms
and non-Exchange websites. Further,
since HHS would continue to allow
these entities to submit requests to
deviate from the manner in which
standardized options are differentially
displayed on HealthCare.gov, potential
burden for these for these entities would
be further reduced. HHS also intends to
provide access to information on
standardized options to web-brokers
through the Health Insurance
Marketplace PUFs and QHP Landscape
file to further minimize burden. The
specific burden estimates for these
requirements can be found in the
corresponding ICR sections for
§§ 155.220 and 156.265.
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
17. Network Adequacy (§ 156.230)
Section 156.230(a)(2) currently
requires a QHP issuer to maintain a
network that is sufficient in number and
types of providers, including providers
that specialize in mental health and
substance use disorders, to ensure that
all services will be accessible without
unreasonable delay. In this proposed
rule, HHS proposes for PY 2023 and
future PYs that all QHPs or QHP
candidates that use a provider network
must comply with network adequacy
standards.
HHS proposes to conduct prospective
quantitative network adequacy reviews
for all FFEs in all FFE states except in
states performing plan management
functions that adhere to a standard as
stringent as the federal standard,
conduct reviews prospectively, and
choose to conduct their own reviews.
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HHS proposes for PY 2023 and future
PYs to adopt time and distance
standards to assess whether FFE QHPs
or QHP candidates fulfill network
standards based on numbers and types
of providers and providers’ geographic
locations. Time and distance standards
would be calculated at the county level
using information from the ECP/NA
template. HHS also proposes to adopt
appointment wait time standards to
assess whether FFE QHPs or QHP
candidates fulfill network adequacy
standards. For PY 2023, issuers would
attest to meeting the appointment wait
time standards. Issuers that are unable
to meet the specified standards for time
and distance or appointment wait times
must submit a justification to account
for such variances.
HHS proposes that, for plans that use
tiered networks to count toward the
issuer’s satisfaction of the network
adequacy standards, providers must be
contracted within the network tier that
results in the lowest cost-sharing
obligation. For plans with two network
tiers (for example, participating
providers and preferred providers), such
as many PPOs, where cost sharing is
lower for preferred providers, only
preferred providers would be counted
towards network adequacy standards.
Finally, HHS proposes to collect
information about providers who offer
telehealth services via the ECP/NA
template to inform network adequacy
and provider access standards for future
PYs. As discussed previously in the
Collection of Information Requirements
section, this may increase related
administrative costs for issuers who do
not already possess this data, though
many issuers already collect and submit
this information for network adequacy
submissions in other markets. While we
anticipate that increased burden related
to telehealth data collection would be
minimal for many issuers, the increased
burden could ultimately lead to an
increase in premiums for consumers. As
noted previously, we believe that the
potential benefits of obtaining telehealth
information and using it to inform
future network adequacy standards are
in the best interests of both QHP
enrollees and QHP issuers. As such, we
anticipate that the additional burden
would be mitigated by the expected
benefits.
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
18. Essential Community Providers
(§ 156.235)
Section 156.235(a)(2)(i) provides that
a plan has a sufficient number and
geographic distribution of ECPs if the
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issuer demonstrates, among other
things, that a QHP or QHP candidate
provides access to a network of
providers that includes at least a
minimum percentage of ECPs, as
specified by HHS.
For PY 2023 and future PYs, HHS
proposes to raise the ECP threshold
applicable to QHPs and QHP candidates
from 20 percent to 35 percent. For this
increased threshold, HHS would
consider issuers to have satisfied the
regulatory threshold requirement if the
issuer contracts with at least 35 percent
of available ECPs in each plan’s service
area to participate in the plan’s provider
network.
We note that in PYs 2015–2017, all
FFE QHP issuers satisfied the 30 percent
threshold with minimal reliance on ECP
write-ins and justifications. In PYs 2018
through 2021, when the ECP threshold
was 20 percent, all QHP issuers satisfied
the lower threshold with ease and very
little reliance on ECP write-ins and
justifications.
Consequently, HHS anticipates that
issuers can meet the proposed 35
percent threshold using ECP write-ins
and justifications as needed. We believe
that increasing the ECP threshold would
lead to greater ECP access for lowincome and medically underserved
individuals. HHS anticipates that costs
may not increase since HHS’ data
analysis shows most issuers could easily
meet this standard or use the
justification process. HHS expects that
administrative cost changes would
likely be minimal for most issuers.
HHS proposes that, for plans that use
tiered networks to count toward the
issuer’s satisfaction of ECP standards,
providers must be contracted within the
network tier that results in the lowest
cost-sharing obligation. For plans with
two network tiers (for example,
participating providers and preferred
providers), such as many PPOs, where
cost sharing is lower for preferred
providers, only preferred providers
would be counted towards ECP
standards.
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
19. Standards for Delegated and
Downstream Entities (§ 156.340)
We propose to amend and add
language to § 156.340, to extend its
applicability to QHP issuers on all
Exchange models. The proposed
changes capture the delegated and
downstream entity standards that would
apply to QHP issuers on State
Exchanges and State Exchange SHOPs,
as well as QHP issuers providing
coverage on Exchange models that use
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715
the Federal platform, including, but not
limited to, FFEs, FF–SHOPs, SBE–FPs,
and SBE–FP–SHOPs. HHS also proposes
to add a requirement that all agreements
between QHP issuers and their
downstream and delegated entities
include language stating that the
relevant Exchange authority, including
State Exchanges, may demand and
receive a delegated and downstream
entity’s records related to the QHP
issuer’s obligations in accordance with
the minimum Federal standards related
to Exchanges. These proposed
amendments are intended to hold QHP
issuers in all Exchange models
responsible for their downstream and
delegated entities’ compliance with
applicable Exchange standards, and to
make their oversight obligations, and
the obligations of their downstream and
delegated entities, explicit. We also
propose conforming amendments to the
title of subpart D of 45 CFR part 156
from ‘‘Standards for Qualified Health
Plan Issuers on Federally Facilitated
Exchanges and State-Based Exchanges
on the Federal platform’’ to ‘‘Standards
for Qualified Health Plan Issuers on
Specific Types of Exchanges’’.
We anticipate these proposals will
impose a minimal burden on QHP
issuers and Exchange authorities
impacted by them. HHS expects some
QHP issuers may need to make changes
to existing record retention policies and
their agreements with delegated and
downstream entities. If finalized as
proposed, the conforming amendments
will become applicable to all books,
contracts, computers, or other electronic
systems, including medical records and
documentation relating to the QHP
issuer’s obligations in accordance with
Federal standards under paragraph (a) of
this section until 10 years from the final
date of the agreement period, as of the
effective date of the final rule. State
Exchange authorities will retain primary
enforcement authority and would be
responsible for ensuring QHP issuers in
State Exchanges and State Exchange
SHOPs maintain oversight over
downstream and delegated entities.
We seek comment on the potential
costs, benefits, and transfers associated
with this provision.
20. Payment for Cost-Sharing
Reductions (§ 156.430)
We propose to amend § 156.430 to
clarify that the CSR data submission
process is mandatory only for those
issuers that received CSR payments
from HHS for any part of the benefit
year as a result of a valid appropriation
to make CSR payments, and voluntary
for other issuers. In the event HHS has
not made CSR payments to issuers
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because there is no appropriation to do
so, HHS will continue to provide those
issuers that have not received CSR
payments from HHS for any part of the
benefit year the option to submit CSR
data, but issuers will not be required to
do so. We do not expect any of these
provisions to increase burden on
issuers, as this amendment would
codify existing practices.
We seek comment on any potential
costs, benefits, and transfers associated
with this provision.
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21. Quality Improvement Strategy
(§ 156.1130)
We propose that beginning in 2023, a
QHP issuer would be required to
address reducing health and health care
disparities as one of their QIS topic
areas in addition to at least one other
topic area outlined in section 1311(g)(1)
of the ACA, including improving health
outcomes of plan enrollees, preventing
hospital readmissions, improving
patient safety and reducing medical
errors, and promoting wellness and
health. We are not proposing any
changes to regulatory text. We do not
estimate additional costs or burdens as
a result of this proposal.
We seek comment on any potential
costs, benefits, and transfers associated
with this proposal.
22. Medical Loss Ratio (§§ 158.140,
158.150, 158.170)
We propose to amend
§ 158.140(b)(2)(iii) to clarify that only
those provider incentives and bonuses
that are tied to clearly defined,
objectively measurable, and welldocumented clinical or quality
improvement standards that apply to
providers may be included in incurred
claims for MLR reporting and rebate
calculation purposes. To the extent
some issuers currently include in
incurred claims payments to providers
that significantly reduce or eliminate
rebates while providing no value to
consumers, the proposed clarification
would result in transfers from such
issuers to enrollees in the form of higher
rebates or lower premiums. Although
we do not know how many issuers
currently engage in such reporting
practices or the amounts improperly
included in MLR calculations, we
estimate the impact of the proposed
clarification by assuming that provider
incentive and bonus payments of 1.06
percent or more of paid claims (the top
5 percent of such observations) may
represent incentives based on MLR or
similar metrics. Based on this
assumption and the MLR data for 2019,
the proposed clarification would
increase rebates paid by issuers to
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consumers or reduce premiums
collected by issuers from consumers by
approximately $ 12 million per year.
We also propose to amend
§ 158.150(a) to specify that only
expenditures directly related to
activities that improve health care
quality may be included in QIA
expenses for MLR reporting and rebate
calculation purposes. This proposed
change would result in transfers from
issuers that currently include indirect
expenses in QIA to enrollees in the form
of higher rebates or lower premiums.
Although we do not know how many
issuers include indirect expenses in
QIA, we estimate the impact of the
proposed change by assuming that
indirect expenses inflate QIA by 41.5
percent (the midpoint of the 33 percentto 50 percent range we have observed
during MLR examinations) for half of
the issuers that report QIA expenses
(based on the frequency of QIA-related
findings in MLR examinations). Based
on these assumptions and the MLR data
for 2020, the proposed clarification
would increase rebates paid by issuers
to consumers or reduce premiums
collected by issuers from consumers by
approximately $ 49.8 million per year.
We also propose to make a technical
amendment to § 158.170(b) to correct an
oversight and remove the reference to
the percentage of premium QIA
reporting option described in
§ 158.221(b)(8), a provision that was
vacated by the United States District
Court for the District of Maryland in
City of Columbus, et al. v. Cochran,406
and thus deleted in part 2 of the 2022
Payment Notice final rule. We do not
anticipate any impact on rebates or
premiums as a result of this change. We
seek comment on any potential costs,
benefits, and transfers associated with
these provisions.
D. Regulatory Alternatives Considered
In developing the policies contained
in this proposed rule, we considered
numerous alternatives to the presented
proposals. Below we discuss the key
regulatory alternatives that we
considered.
As described in prior rulemakings and
the 2021 RA Technical Paper, we
considered a variety of alternatives to
the proposed model specifications and
updated enrollment duration factors for
the HHS risk adjustment models.407 For
example, we considered adding a nonlinear term or HCC counts terms for all
406 523
F. Supp. 3d 731 (D. Md. 2021).
FR 78572 at 78583–78586; See the 2021
HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes, available at https://
www.cms.gov/files/document/2021-ra-technicalpaper.pdf.
407 85
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enrollees in the adult and child risk
adjustment models. As detailed in the
proposed 2022 Payment Notice and the
2021 RA Technical Paper, we found that
non-linear model specifications often
failed to converge, preventing us from
testing the impact of the non-linear
model specifications on the magnitude
of transfers.408 In addition, the nonlinear model specifications would
significantly overhaul the current linear
models, increasing the administrative
burden on issuers and HHS. We also
found that the HCC counts terms
approach posed gaming concerns,
which would violate principle six of the
HHS-operated risk adjustment program
by rewarding coding proliferation.
In addition to the non-linear and HCC
counts model specifications, we also
considered variations to the interacted
HCC counts factors and the two-stage
weighted model specifications.
Specifically, we tested various
alternative caps for the weights based on
the distribution of costs, but found the
proposed caps resulted in better
prediction on average. For the
prediction weights, we tested various
alternative forms of weights, including
reciprocals of the square root of
prediction, log of prediction, and
residuals from the first-step estimation,
but the reciprocal of the capped
predictions resulted in better PRs for
low-cost enrollees compared to any of
the other weights.
For the interacted HCC counts factors,
we tested several HCCs and considered
adding and removing certain HCCs from
the proposed list in Table 3. We chose
the list of HCCs in Table 3 because
including these HCCs most improved
prediction for enrollees with the highest
costs, multiple HCCs, and with these
specific HCCs. We also considered
various alternatives to structure the
interacted HCC counts, such as applying
individual interacted HCC count factors
(between 1–10 based on the number of
HCCs an enrollee has) to each of the
selected HCCs included in the models,
instead of combining all of the selected
HCCs into two severe and transplant
indicator groups. We chose the
proposed model specification because it
would add fewer additional factors to
the models, which minimizes the
increased burden on issuers and HHS
without sacrificing any significant
predictive accuracy.
For the enrollment duration factors in
the adult models, we propose to replace
the enrollment duration factors with
monthly duration factors of up to 6
months for enrollees with HCCs. The
purpose of this proposed change is to
408 Ibid.
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address the underprediction of plan
liability for partial-year adult enrollees
with HCCs. As part of this assessment,
we considered whether enrollment
duration factors by type of partial-year
enrollment (enrolling through a special
enrollment period versus enrolling
during the annual open enrollment
period and dropping enrollment
partway through the year), by market
type (individual versus small group
market), or by specific HCC (as well as
by type of HCC—acute versus chronic)
may be warranted. As previously noted,
varying enrollment duration factors by
partial-year enrollment type or by
market produced factors that were
generally very similar between partialand full-year enrollees, which indicates
they would add little value to the
models while increasing complexity.409
We chose the proposed enrollment
duration factors, contingent on the
presence of at least one HCC, because
these factors improve predictive
accuracy for partial-year enrollees and
simplify the adult risk adjustment
models compared to the current
models.410
Relative to the other considered
alternatives, our proposed model
specification changes would improve
the current models’ predictive accuracy
and minimize burden on issuers and
HHS by avoiding unnecessary
complexity.
With respect to the proposed changes
to § 153.320(d), we considered repealing
risk adjustment state flexibility for the
individual catastrophic and noncatastrophic market risk pools, while
retaining risk adjustment state flexibility
for the small group market risk pool.
Consistent with the directive in E.O.
14009 411 to prioritize protecting and
strengthening the ACA and making
high-quality health care accessible and
affordable for all individuals, we
considered whether this approach is
inconsistent with policies described in
Sections 1 and 3 of E.O. 14009. In prior
rulemakings, we received comments
stating that risk adjustment state
flexibility in any market may result in
risk selection, market destabilization,
increased premiums, smaller networks,
and worse plan options. we believe that
generally retaining state flexibility could
409 See, for example, 85 FR 78572 at 78585–78586
and Sections 3.3.1 and 3.3.2 of the 2021 HHSOperated Risk Adjustment Technical Paper on
Possible Model Changes, available at https://
www.cms.gov/files/document/2021-ra-technicalpaper.pdf.
410 As detailed above, these new proposed factors
would only apply to partial-year adult enrollees
with up to 6 months of enrollment and at least one
payment HCC.
411 Executive Order 14009; 86 FR 7793 (Feb. 2,
2021).
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introduce unnecessary risk of
undermining the stated goals of the risk
adjustment program.
We also considered whether to adopt
an exception for states that previously
requested reductions under § 153.320(d)
to the risk adjustment transfers
calculated by HHS under the state
payment transfer formula. In the one
state that has requested to reduce
transfers under this policy, it has
stabilized market participation and
impacts issuers who receive risk
adjustment payments by less than 1
percent of premiums.412 Although
allowing state flexibility may
undermine the efficacy of risk
adjustment by not fully compensating
higher-risk plans for their enrollees, we
believe the benefit of maintaining
participation in markets that might
otherwise only have a single issuer
offering coverage outweighs the
potential harm of not fully
compensating the higher-risk plan for its
enrollees when there is a de minimis
(less than 1 percent) impact on
premiums. Additionally, under the
proposal in this rulemaking, if a prior
participant seeks a future reduction to
risk adjustment transfers in the 2024
benefit year or beyond, the state would
need to demonstrate that it meets the de
minimis regulatory criteria, meaning no
issuer would need to increase its
premiums by more than 1 percent as a
result of the reduced risk adjustment
payments.
With regard to the proposed changes
to § 155.320, we considered taking no
action to modify the requirement that
when an Exchange does not reasonably
expect to obtain sufficient verification
data related to enrollment in or
eligibility for employer sponsored
coverage, the Exchange must select a
random sample of applicants and
attempt to verify their attestation with
the employer listed on their Exchange
application. However, based on HHS’
experience conducting sampling, this
manual verification process requires
significant resources for a low return on
investment, as using this method HHS
identified only a small population of
applicants who received APTC/CSR
payments inappropriately. We believe
the proposed change discussed earlier
in the preamble to design a process to
verify enrollment in or eligibility for an
employer sponsored plan, informed by
a risk assessment, is reasonably
designed to ensure the accuracy of data,
and is based on the activities or
412 See, for example, the 2019, 2020, and 2021
Unified Rate Review Public Use Files, available at
https://www.cms.gov/CCIIO/Resources/DataResources/ratereview.
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methods used by an Exchange such as
studies, research, and analysis of an
Exchange’s own enrollment data. We
also believe the proposed change would
protect the integrity of the individual
market by allowing all Exchanges to
proactively identify applicants with the
greatest incentive to forego enrolling in
an employer sponsored plan in favor of
Exchange coverage with APTC/CSRs
that they may not be eligible to receive,
thereby potentially adding high health
risk to the individual market risk pool
that should be covered by the group
health market, for example.
We considered several alternatives to
specifying in § 155.420 that Exchanges
may conduct pre-enrollment verification
of eligibility for special enrollment
periods, at the option of the Exchange,
including requiring Exchanges to verify
a certain percentage of special
enrollment period enrollments and
designating specific special enrollment
period types for which eligibility must
be verified by the Exchange. However,
we believed that imposing any
requirements for pre-enrollment special
enrollment period verification would
increase burden on consumers and
Exchanges and decrease implementation
flexibility to decide the best way to
conduct special enrollment period
verification based on Exchange type,
population characteristics, and trends.
HHS considered multiple options for
measuring the improper payment
amounts and rates for State Exchanges
to comply with its statutory mandate in
the PIIA. HHS developed and pilot
tested the proposed methodology with
extensive collaboration from
participating Exchanges during a multiyear research and demonstration period.
HHS considered the following
alternatives while developing this
proposed rule:
1. Conducting No Reviews
HHS might take no preventive efforts
to detect improper payments. We would
wait passively until third-party
investigators, private whistleblowers,
qui tam relators, disgruntled relatives,
or others report speculation through
Inspector General channels. Advanced
statistical analysis could estimate the
odds of third-party prosecution and
project the improper payment amount
and rate for each State Exchange (with
wide confidence intervals). This low
intervention strategy may not fully
comply with statutory intent.
2. Placing More Responsibility on State
Exchanges To Conduct Reviews
HHS could require that each State
Exchange determine its own improper
payment rate with broad discretion on
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the methodology. This option would
maximize regulatory flexibility while
still complying with PIIA 2019
requirements. However, diverse
methodology would make the State
Exchanges’ results difficult to compare
and of variable validity. In addition, the
costs resulting from higher error rates
are borne by the federal government in
the form of increased APTC and CSRs,
giving State Exchanges’ minimal
incentive to aggressively reduce
improper payments.
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3. Placing More Responsibility on State
Exchanges To Engage Third-Party
Reviewers
HHS could require that State
Exchanges engage third-party reviewers
to determine the improper payment rate.
As with financial reporting, the State
Exchange could select among competing
vendors to obtain its preferred
combination of methodology, service,
quality, and price. However, this
approach would require more work and
resources from both State Exchanges
and HHS than the proposed
methodology would require. The third
party would need to obtain personally
identifiable information from both state
and federal data systems. These
processes suffer from potential record
matching and data security issues. In
addition, competing vendors might offer
incompatible methodologies, producing
non-comparable improper payment
rates.
4. Conducting a Random Sample Across
All State Exchanges
HHS could annually sample from the
population of all State Exchange
enrollees, rather than within each State
Exchange. Thus, more cases would
come from larger State Exchanges. This
design would increase the efficiency
and decrease the variance for the
national estimate, but it would not
provide an estimate for each State
Exchange. It also would not reduce the
burden on each State Exchange and may
not comply with statutory intent.
With respect to standardized options,
we considered a range of options for our
proposed policy approach at § 156.201.
On one end of this range, we considered
resuming standardized options as
reflected in the 2017 and 2018 Payment
Notices. This approach would have
allowed issuers to voluntarily offer
standardized options and have the
Exchanges on the Federal platform,
web-brokers, and Classic DE and EDE
Pathways differentially display these
plans. We also considered gradually
limiting the number of nonstandardized options per issuer, product
network type, metal level, and service
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area over the course of several PYs. We
also considered preferentially
displaying standardized options over
non-standardized options. We also
considered requiring issuers to offer
exclusively standardized options in
FFEs and SBE–FPs. We believe the
approach we have chosen for
standardized options in which we
propose to require issuers to offer
standardized options and do not
propose to limit the number of nonstandardized offerings in PY 2023
strikes the greatest balance between
simplifying the plan selection process,
combatting discriminatory benefit
designs, and advancing health equity,
all while promoting a smooth transition
to the introduction of standardized
options.
For our proposal in §§ 155.240(e),
155.305(f)(5), and 155.340 on prorating
the calculation and administration of
premium and APTC, HHS considered an
alternative form of implementation in
which HHS would perform the
proration on behalf of each State
Exchange which does not already
implement proration according to the
proposed methodology. This approach
would lessen concern regarding the
burden of implementing a new
proration methodology among State
Exchanges. HHS already has the
structures in place to prorate APTC and
premium amounts in accordance with
the proposed methodology and has
already implemented proration in the
FFEs and SBE–FPs.413 Under this
alternative, HHS would assume
responsibility for prorating the amount
of APTC due to each State Exchange
based on the methodology HHS
proposes in § 155.340 which states that
when an enrollee is enrolled in a
particular policy for less than the full
coverage month (including when the
enrollee is enrolled in multiple policies
within a month, each lasting less than
the full coverage month) the amount of
APTC paid to the issuer of the policy
will be calculated as the product of (1)
the APTC applied on the policy for one
month of coverage divided by the
number of days in the month, and (2)
the number of days for which coverage
is provided during the applicable
month. However, this alternative would
require State Exchanges to agree to
allow HHS to use the data on the
monthly SBMI to calculate the prorated
amount. This would require State
Exchanges to review payment reports to
ensure the correct calculation of APTC
413 Under the SBE–FP agreement, the same
method also applies in the SBE–FPs, as they rely
on the Federal platform, which calculates
applicable premiums in those Exchanges.
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and premium is reflected on each
applicable State Exchanges’ 1095–A.
HHS expects that this alternative would
produce additional burden of $4,500 in
contract labor to update each State
Exchange’s SBMI and would necessitate
increased data sharing and coordination
back and forth between HHS and the
applicable State Exchanges. In order to
streamline the process of proration and
allow State Exchanges greater control in
the administration of APTC, HHS
determined that it would propose that
each State Exchange would prorate their
own APTC and premium amounts for
the applicable enrollees in their state.
HHS seeks comment on the alternative
proposals considered.
Additionally, for the proposal to
prorate APTC amounts with
amendments to §§ 155.240, 155.305(f)(5)
and 155.340, we considered proposing
to implement this requirement for the
2023 benefit year. However, after
analyzing the potential burden on State
Exchanges to achieve operational
readiness, we concluded that 2023 may
not provide sufficient time. Therefore,
we propose 2024 benefit year
implementation and request comment
on the feasibility of 2023 benefit year
implementation.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5
U.S.C. 601, et seq.), requires agencies to
prepare an initial regulatory flexibility
analysis to describe the impact of the
proposed rule on small entities, unless
the head of the agency can certify that
the rule will not have a significant
economic impact on a substantial
number of small entities. The RFA
generally defines a ‘‘small entity’’ as (1)
a proprietary firm meeting the size
standards of the Small Business
Administration (SBA), (2) a not-forprofit organization that is not dominant
in its field, or (3) a small government
jurisdiction with a population of less
than 50,000. States and individuals are
not included in the definition of ‘‘small
entity.’’ HHS uses a change in revenues
of more than 3 to 5 percent as its
measure of significant economic impact
on a substantial number of small
entities.
In this proposed rule, we propose
standards for the risk adjustment and
HHS–RADV programs, which are
intended to stabilize premiums and
reduce incentives for issuers to avoid
higher-risk enrollees. Because we
believe that insurance firms offering
comprehensive health insurance
policies generally exceed the size
thresholds for ‘‘small entities’’
established by the SBA, we do not
believe that an initial regulatory
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flexibility analysis is required for such
firms.
We believe that health insurance
issuers and group health plans would be
classified under the North American
Industry Classification System (NAICS)
code 524114 (Direct Health and Medical
Insurance Carriers). According to SBA
size standards, entities with average
annual receipts of $41.5 million or less
would be considered small entities for
these NAICS codes. Issuers could
possibly be classified in 621491 (HMO
Medical Centers) and, if this is the case,
the SBA size standard would be $35
million or less.414 We believe that few,
if any, insurance companies
underwriting comprehensive health
insurance policies (in contrast, for
example, to travel insurance policies or
dental discount policies) fall below
these size thresholds. Based on data
from MLR annual report submissions for
the 2019 MLR reporting year,
approximately 77 out of 479 issuers of
health insurance coverage nationwide
had total premium revenue of $41.5
million or less.415 This estimate may
overstate the actual number of small
health insurance issuers that may be
affected, since over 72 percent of these
small issuers belong to larger holding
groups, and many, if not all, of these
small companies are likely to have nonhealth lines of business that will result
in their revenues exceeding $41.5
million. Only 10 of these 90 potentially
small entities, three of them part of
larger holding groups, are estimated to
experience a change in rebates under
the proposed amendments to the MLR
provisions of this proposed rule in part
158. Therefore, we do not expect the
proposed MLR provisions of this rule to
affect a substantial number of small
entities.
The proposals related to SEIPM at
§§ 155.1500–155.1540 will affect only
State Exchanges. As state governments
do not constitute small entities under
the statutory definition, and as all State
Exchanges have revenues exceeding $5
million, an impact analysis for these
provisions is not required under the
RFA.
In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule under title
XVIII, title XIX, or part B of title 42 of
the Social Security Act may have a
significant impact on the operations of
a substantial number of small rural
hospitals. This analysis must conform to
the provisions of section 603 of the
414 https://www.sba.gov/document/support-table-size-standards.
415 Available at https://www.cms.gov/CCIIO/
Resources/Data-Resources/mlr.html.
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RFA. For purposes of section 1102(b) of
the Act, we define a small rural hospital
as a hospital that is located outside of
a metropolitan statistical area and has
fewer than 100 beds. While this rule is
not subject to section 1102 of the Act,
we have determined that This proposed
rule would not affect small rural
hospitals. Therefore, the Secretary has
determined that this proposed rule
would not have a significant impact on
the operations of a substantial number
of small rural hospitals.
F. Unfunded Mandates
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
costs and benefits and take certain other
actions before issuing a proposed rule
that includes any Federal mandate that
may result in expenditures in any 1 year
by a state, local, or Tribal governments,
in the aggregate, or by the private sector,
of $100 million in 1995 dollars, updated
annually for inflation. In 2021, that
threshold is approximately $158
million. Although we have not been
able to quantify all costs, we expect the
combined impact on state, local, or
Tribal governments and the private
sector does not meet the UMRA
definition of unfunded mandate.
G. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it issues a proposed
rule that imposes substantial direct
costs on state and local governments,
preempts state law, or otherwise has
federalism implications.
In compliance with the requirement
of E.O. 13132 that agencies examine
closely any policies that may have
federalism implications or limit the
policy making discretion of the states,
we have engaged in efforts to consult
with and work cooperatively with
affected states, including participating
in conference calls with and attending
conferences of the NAIC, and consulting
with state insurance officials on an
individual basis.
While developing this rule, we
attempted to balance the states’ interests
in regulating health insurance issuers
with the need to ensure market stability.
By doing so, we complied with the
requirements of E.O. 13132.
Because states have flexibility in
designing their Exchange and Exchangerelated programs, state decisions will
ultimately influence both administrative
expenses and overall premiums. States
are not required to establish an
Exchange or risk adjustment program.
For states that elected previously to
operate an Exchange, those states had
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719
the opportunity to use funds under
Exchange Planning and Establishment
Grants to fund the development of data.
Accordingly, some of the initial cost of
creating programs was funded by
Exchange Planning and Establishment
Grants. After establishment, Exchanges
must be financially self-sustaining, with
revenue sources at the discretion of the
state. Current State Exchanges charge
user fees to issuers.
In our view, while this proposed rule
would not impose substantial direct
requirement costs on state and local
governments, this regulation has
federalism implications due to potential
direct effects on the distribution of
power and responsibilities among the
state and federal governments relating to
determining standards relating to health
insurance that is offered in the
individual and small group markets. For
example, the repeal of the risk
adjustment state flexibility policy may
have federalism implications, but they
are mitigated because states have the
option to operate their own Exchange
and risk adjustment program if they
believe the HHS risk adjustment
methodology does not account for statespecific factors unique to the state’s
markets.
In addition, we believe this proposed
regulation has federalism implications
due to our proposal for Exchanges to
design a new risk-based verification
process for enrollment in or eligibility
for employer sponsored plan coverage
that meets minimum value standards,
that is based on the Exchange’s
assessment of risk for inappropriate
APTC/CSR payments. However, the
federalism implications are mitigated
because the proposed requirement
provides Exchanges with the flexibility
to determine the best process to verify
employer sponsored coverage and may
choose not to implement such a riskbased verification process.
As previously noted, the proposals in
this rule related to SEIPM would impose
a minimal unfunded mandate on State
Exchanges to supply data for the
improper payment calculation.
Accordingly, E.O. 13132 does not apply
to this section of the proposed rule. In
addition, statute requires HHS to
determine the amount and rate of
improper payments. Finally, states have
the option to choose an FFE or SBE–FP,
each of which place different federal
burdens on the state. As the SEIPM
section of the proposed rule should not
conflict with state law, HHS does not
anticipate any preemption of state law.
We invite State Exchanges to submit
comments on this section of the
proposed rule if they believe it would
conflict with state law.
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Chiquita Brooks-LaSure,
Administrator of the Centers for
Medicare & Medicaid Services,
approved this document on December
15, 2021.
List of Subjects
45 CFR Part 144
Health care, Health insurance,
Reporting and recordkeeping
requirements.
45 CFR Part 155
Administrative practice and
procedure, Advertising, Brokers,
Conflict of interests, Consumer
protection, Grants administration, Grant
programs-health, Health care, Health
insurance, Health maintenance
organizations (HMO), Health records,
Hospitals, Indians, Individuals with
disabilities, Intergovernmental relations,
Loan programs-health, Medicaid,
Organization and functions
(Government agencies), Public
assistance programs, Reporting and
recordkeeping requirements, Technical
assistance, Women and youth.
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45 CFR Part 156
Administrative practice and
procedure, Advertising, Advisory
committees, Brokers, Conflict of
interests, Consumer protection, Grant
programs-health, Grants administration,
Health care, Health insurance, Health
maintenance organization (HMO),
Health records, Hospitals, Indians,
Individuals with disabilities, Loan
programs-health, Medicaid,
Organization and functions
(Government agencies), Public
assistance programs, Reporting and
recordkeeping requirements, State and
local governments, Sunshine Act,
Technical assistance, Women, Youth.
45 CFR Part 158
Administrative practice and
procedure, Claims, Health care, Health
insurance, Penalties, Reporting and
recordkeeping requirements.
For the reasons set forth in the
preamble, under the authority at 5
U.S.C. 301, the Department of Health
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premium for a new policy, certificate, or
contract of insurance to the prior policy,
certificate, or contract of insurance,
violates paragraph (a) of this section.
*
*
*
*
*
■
PART 153—STANDARDS RELATED TO
REINSURANCE, RISK CORRIDORS,
AND RISK ADJUSTMENT UNDER THE
AFFORDABLE CARE ACT
Authority: 42 U.S.C. 300gg through 300gg–
63, 300gg–91, 300gg–92, and 300gg–111
through 300gg–139, as amended.
■
§ 144.103
Authority: 42 U.S.C. 18031, 18041, and
18061 through 18063.
[Amended]
2. Amend § 144.103 in the definition
of ‘‘large group market’’ by removing the
phrase ‘‘, unless otherwise provided
under State law.’’
■
45 CFR Part 153
Administrative practice and
procedure, Health care, Health
insurance, Health records,
Intergovernmental relations,
Organization and functions
(Government agencies), Reporting and
recordkeeping requirements.
20:01 Jan 04, 2022
PART 144—REQUIREMENTS
RELATING TO HEALTH INSURANCE
COVERAGE
1. The authority citation for part 144
continues to read as follows:
45 CFR Part 147
Health care, Health insurance,
Reporting and recordkeeping
requirements.
VerDate Sep<11>2014
and Human Services proposes to amend
45 CFR subtitle A, subchapter B, as set
forth below.
PART 147—HEALTH INSURANCE
REFORM REQUIREMENTS FOR THE
GROUP AND INDIVIDUAL HEALTH
INSURANCE MARKETS
3. The authority citation for part 147
continues to read as follows:
■
Authority: 42 U.S.C. 300gg through 300gg–
63, 300gg–91, and 300gg–92, as amended,
and section 3203, Pub. L. 116–136, 134 Stat.
281.
4. Amend § 147.104 by—
a. Revising paragraph (e);
b. Redesignating paragraph (i) as
paragraph (j); and
■ c. Adding a new paragraph (i).
The revision and addition read as
follows:
■
■
■
§ 147.104 Guaranteed availability of
coverage.
*
*
*
*
*
(e) Marketing. A health insurance
issuer and its officials, employees,
agents, and representatives must comply
with any applicable State laws and
regulations regarding marketing by
health insurance issuers and cannot
employ marketing practices or benefit
designs that will have the effect of
discouraging the enrollment of
individuals with significant health
needs in health insurance coverage or
discriminate based on an individual’s
race, color, national origin, present or
predicted disability, age, sex, sexual
orientation, gender identity, expected
length of life, degree of medical
dependency, quality of life, or other
health conditions.
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(i) Coverage denials for failure to pay
premiums for prior coverage. A health
insurance issuer that denies coverage to
an individual or employer due to the
individual’s or employer’s failure to pay
premium owed under a prior policy,
certificate, or contract of insurance,
including by attributing payment of
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5. The authority citation for part 153
continues to read as follows:
6. Amend § 153.320 by—
a. Revising paragraphs (d)
introductory text and (d)(1)(iii);
■ b. Adding paragraph (d)((1)(iv);
■ c. Revising paragraphs (d)(4)(i)(A) and
(B); and
■ d. Adding paragraph (d)(5).
The revisions and additions read as
follows:
■
■
§ 153.320 Federally certified risk
adjustment methodology.
*
*
*
*
*
(d) State flexibility to request
reductions to transfers. For the 2020
through 2023 benefit years, States can
request to reduce risk adjustment
transfers in the State’s individual
catastrophic, individual noncatastrophic, small group, or merged
markets risk pools by up to 50 percent
in States where HHS operates the risk
adjustment program. Beginning with the
2024 benefit year, only prior
participants, as defined in paragraph
(d)(5) of this section, may request to
reduce risk adjustment transfers in the
State’s individual catastrophic,
individual non-catastrophic, small
group, or merged markets risk pools by
up to 50 percent in States where HHS
operates the risk adjustment program.
(1) * * *
(iii) For the 2020 through 2023 benefit
years, a justification for the reduction
requested demonstrating the Statespecific factors that warrant an
adjustment to more precisely account
for relative risk differences in the State
individual catastrophic, individual noncatastrophic, small group, or merged
market risk pool, or demonstrating the
requested reduction would have de
minimis impact on the necessary
premium increase to cover the transfers
for issuers that would receive reduced
transfer payments; or
(iv) Beginning with the 2024 benefit
year, a justification for the reduction
requested demonstrating the requested
reduction would have de minimis
impact on the necessary premium
increase to cover the transfers for issuers
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that would receive reduced transfer
payments.
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(4) * * *
(i) * * *
(A) For the 2020 through 2023 benefit
years, that State-specific rules or other
relevant factors warrant an adjustment
to more precisely account for relative
risk differences in the State’s individual
catastrophic, individual noncatastrophic, small group, or merged
market risk pool and support the
percentage reduction to risk adjustment
transfers requested; or State-specific
rules or other relevant factors warrant
an adjustment to more precisely account
for relative risk differences in the State’s
individual catastrophic, individual noncatastrophic, small group, or merged
market risk pool and the requested
reduction would have de minimis
impact on the necessary premium
increase to cover the transfers for issuers
that would receive reduced transfer
payments.
(B) Beginning with the 2024 benefit
year that the requested reduction would
have de minimis impact on the
necessary premium increase to cover the
transfers for issuers that would receive
reduced transfer payments.
*
*
*
*
*
(5) Exception for prior participants.
As used in paragraph (d) of this section,
prior participants mean States that
submitted a State reduction request in
the State’s individual catastrophic,
individual non-catastrophic, small
group, or merged market risk pool in the
2020, 2021, 2022, or 2023 benefit year.
■ 7. Amend § 153.710 by—
■ a. Revising paragraphs (h)(1)
introductory text and (h)(1)(iii) and (iv);
■ b. Adding paragraph (h)(1)(v); and
■ c. Revising paragraphs (h)(2) and (3).
The revisions and addition read as
follows:
§ 153.710
Data requirements.
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(h) * * *
(1) Notwithstanding any discrepancy
report made under paragraph (d)(2) of
this section, any discrepancy filed
under § 153.630(d)(2), or any request for
reconsideration under § 156.1220(a) of
this subchapter with respect to any risk
adjustment payment or charge,
including an assessment of risk
adjustment user fees and risk
adjustment data validation adjustments;
reinsurance payment; cost-sharing
reduction payment or charge; or risk
corridors payment or charge, unless the
dispute has been resolved, an issuer
must report, for purposes of the risk
corridors and MLR programs:
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(iii) A cost-sharing reduction amount
equal to the actual amount of costsharing reductions for the benefit year
as calculated under § 156.430(c) of this
subchapter, to the extent not reimbursed
to the provider furnishing the item or
service;
(iv) For medical loss ratio reporting
only, the risk corridors payment to be
made or charge assessed by HHS under
§ 153.510; and
(v) The risk adjustment data
validation adjustment calculated by
HHS in the applicable benefit year’s
Summary Report of Benefit Year Risk
Adjustment Data Validation
Adjustments to Risk Adjustment
Transfers.
(2) An issuer must report during the
current MLR and risk corridors
reporting year any adjustment made or
approved by HHS for any risk
adjustment payment or charge,
including an assessment of risk
adjustment user fees and risk
adjustment data validation adjustments;
any reinsurance payment; any costsharing reduction payment or charge; or
any risk corridors payment or charge
before August 15, or the next applicable
business day, of the current MLR and
risk corridors reporting year unless
instructed otherwise by HHS. An issuer
must report any adjustment made or
approved by HHS for any risk
adjustment payment or charge,
including an assessment of risk
adjustment user fees; any reinsurance
payment; any cost-sharing reduction
payment or charge; or any risk corridors
payment or charge where such
adjustment has not been accounted for
in a prior MLR and Risk Corridor
Annual Reporting Form, in the MLR and
Risk Corridors Annual Reporting Form
for the following reporting year.
(3) In cases where HHS reasonably
determines that the reporting
instructions in paragraph (h)(1) or (2) of
this section would lead to unfair or
misleading financial reporting, issuers
must correct their data submissions in a
form and manner to be specified by
HHS.
■ 8. Revise § 153.730 to read as follows:
§ 153.730
Deadline for submission of data.
A risk adjustment covered plan or a
reinsurance-eligible plan in a State in
which HHS is operating the risk
adjustment or reinsurance program, as
applicable, must submit data to be
considered for risk adjustment
payments and charges and reinsurance
payments for the applicable benefit year
by April 30 of the year following the
applicable benefit year or, if such date
is not a business day, the next
applicable business day.
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721
PART 155—EXCHANGE
ESTABLISHMENT STANDARDS AND
OTHER RELATED STANDARDS
UNDER THE AFFORDABLE CARE ACT
9. The authority citation for part 155
continues to read as follows:
■
Authority: 42 U.S.C. 18021–18024, 18031–
18033, 18041–18042, 18051, 18054, 18071,
and 18081–18083.
§ 155.120
[Amended]
10. Amend § 155.120 in paragraph
(c)(1)(ii) by removing the phrase ‘‘age, or
sex’’ and adding in its place the phrase
‘‘age, sex, sexual orientation, or gender
identity’’.
■
§ 155.206
[Amended]
11. Amend § 155.206 in paragraph (i)
by removing the phrase ‘‘$100 for each
day for each’’ and adding in its place the
phrase ‘‘$100 for each day, as adjusted
annually under 45 CFR part 102, for
each’’.
■ 12. Amend § 155.220 by—
■ a. Revising paragraphs (c)(3)(i)(A) and
(L);
■ b. Adding paragraph (c)(3)(i)(M);
■ c. In paragraph (j)(2)(i) by removing
the phrase ‘‘age, or sex’’ and adding in
its place the phrase ‘‘age, sex, sexual
orientation, or gender identity’’;
■ d. Revising paragraphs (j)(2)(ii);
■ e. In paragraph (j)(2)(iv), by removing
the phrase ‘‘described in § 155.260(b)(2);
and’’ and adding in its place the phrase
‘‘described in § 155.260(b)(2);’’; and
■ f. Adding paragraphs (j)(2)(vi) through
(viii).
The revisions and additions read as
follows:
■
§ 155.220 Ability of States to permit agents
and brokers and web-brokers to assist
qualified individuals, qualified employers,
or qualified employees enrolling in QHPs.
*
*
*
*
*
(c) * * *
(3) * * *
(i) * * *
(A) Disclose and display the following
QHP information provided by the
Exchange or directly by QHP issuers
consistent with the requirements of
§ 155.205(c), and to the extent that
enrollment support for a QHP is not
available using the web-broker’s
website, prominently display a
standardized disclaimer provided by
HHS stating that enrollment support for
the QHP is available on the Exchange
website, and provide a Web link to the
Exchange website:
(1) Premium and cost-sharing
information;
(2) The summary of benefits and
coverage established under section 2715
of the PHS Act;
(3) Identification of whether the QHP
is a bronze, silver, gold, or platinum
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level plan as defined by section 1302(d)
of the Affordable Care Act, or a
catastrophic plan as defined by section
1302(e) of the Affordable Care Act;
(4) The results of the enrollee
satisfaction survey, as described in
section 1311(c)(4) of the Affordable Care
Act;
(5) Quality ratings assigned in
accordance with section 1311(c)(3) of
the Affordable Care Act; and
(6) The provider directory made
available to the Exchange in accordance
with § 156.230 of this subchapter.
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*
(L) Not display QHP advertisements
or recommendations, or otherwise
provide favored or preferred placement
in the display of QHPs, based on
compensation the agent, broker, or webbroker receives from QHP issuers; and
(M) Prominently display a clear
explanation of the rationale for QHP
recommendations and the methodology
for its default display of QHPs.
*
*
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*
(j) * * *
(2) * * *
(ii) Provide the federally-facilitated
Exchanges with correct information
under section 1411(b) of the Affordable
Care Act, including, but not limited to:
(A) Only entering an email address on
an application for Exchange coverage or
an application for advance payments of
the premium tax credit and cost sharing
reductions for QHPs that is secure, not
disposable, and belongs to the consumer
or the consumer’s authorized
representative designated in compliance
with § 155.227. A consumer’s email
address may only be entered on an
Exchange application with the consent
of the consumer or the consumer’s
authorized representative. Properly
entered email addresses must adhere to
the following guidelines:
(1) The email address may not have
domains that remove email from an
inbox after a set period of time;
(2) The email address must be
accessible by the consumer, or the
consumer’s authorized representative
designated in compliance with
§ 155.227, and may not be accessible by
the agent, broker, or web-broker
assisting the consumer; and
(3) The email address may not have
domains that belong to the agent,
broker, or web-broker or their business
or agency.
(B) Only entering a telephone number
on an application for Exchange coverage
or an application for advance payments
of the premium tax credit and cost
sharing reductions for QHPs that
belongs to the consumer or their
authorized representative designated in
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compliance with § 155.227. Telephone
numbers entered on Exchange
applications may not be the personal
number or business number of the
agent, broker, or web-broker assisting
the consumer, or their business or
agency, unless the telephone number is
actually that of the consumer or their
authorized representative.
(C) Only entering a mailing address
on an application for Exchange coverage
or an application for advance payments
of the premium tax credit and cost
sharing reductions for QHPs that
belongs to, or is primarily accessible by,
the consumer or their authorized
representative designated in compliance
with § 155.227, is not for the exclusive
or convenient use of the agent, broker,
or web-broker, and is an actual
residence or a secure location where the
consumer or their authorized
representative may receive
correspondence, such as a P.O. Box or
homeless shelter. Mailing addresses
entered on Exchange applications may
not be that of the agent, broker, or webbroker assisting the consumer, or their
business or agency, unless the address
is the actual residence of the consumer
or their authorized representative.
(D) When submitting household
income projections used by the
Exchange to determine a tax filer’s
eligibility for advance payments of the
premium tax credit in accordance with
§ 155.305(f) or cost-sharing reductions
in accordance with § 155.305(g), only
entering a consumer’s household
income projection that the consumer or
the consumer’s authorized
representative designated in compliance
with § 155.227 has knowingly
authorized and confirmed as accurate.
Household income projections on
Exchange applications must be
calculated and attested to by the
consumer. The agent, broker, or webbroker assisting the consumer may
answer questions posed by the
consumer related to household income
projection, such as helping the
consumer determine what qualifies as
income.
*
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*
(vi) Not engage in scripting and other
automation of interactions with CMS
Systems or the Direct Enrollment
Pathways, unless approved in advance
in writing by CMS.
(vii) Only use an identity that belongs
to the consumer when identity proofing
the consumer’s account on
HealthCare.gov.
(viii) When providing information to
federally-facilitated Exchanges that may
result in a determination of eligibility
for a special enrollment period in
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accordance with § 155.420, obtain
authorization from the consumer to
submit the request for a determination
of eligibility for a special enrollment
period and make the consumer aware of
the specific triggering event and special
enrollment period for which the agent,
broker, or web-broker will be submitting
an eligibility determination request on
the consumer’s behalf.
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*
■ 13. Amend § 155.240 by adding
paragraph (e)(2) to read as follows:
§ 155.240
Payment of premiums.
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*
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*
*
(e) * * *
(2) For plan years 2024 and beyond,
in each Exchange, the premium for a
policy in which an enrollee is enrolled
for less than the full coverage month,
including when the enrollee is enrolled
in multiple policies within a month,
each lasting less than the full coverage
month, must equal the product of:
(i) The premium for 1 month of
coverage divided by the number of days
in the month; and
(ii) The number of days for which
coverage is being provided in the month
described in paragraph (e)(1)(i) of this
section.
■ 14. Amend § 155.305 by revising
paragraph (f)(1)(i) to read as follows:
§ 155.305
Eligibility standards.
*
*
*
*
*
(f) * * *
(1) * * *
(i) He or she is expected to have a
household income that will qualify the
tax filer as an applicable taxpayer
according to 26 CFR 1.36B–2(b) for the
benefit year for which coverage is
requested; and
*
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*
■ 15. Amend § 155.320 by—
■ a. Revising paragraphs (d)(4)
introductory text, (d)(4)(i) introductory
text, and (d)(4)(i)(A);
■ b. Removing paragraph (d)(4)(i)(D).
■ c. Redesignating paragraph (d)(4)(i)(E)
as paragraph (d)(4)(i)(D).
■ d. Removing paragraph (d)(4)(i)(F);
■ e. Redesignating paragraph (d)(4)(i)(G)
as paragraph (d)(4)(i)(E) and revising it;
and
■ f. Removing and reserving paragraph
(d)(4)(ii).
The revisions read as follows:
§ 155.320 Verification process related to
eligibility for insurance affordability
programs.
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*
*
(d) * * *
(4) Alternate procedures. For any
benefit year for which it does not
reasonably expect to obtain sufficient
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verification data as described in
paragraphs (d)(2)(i) through (iii) of this
section, the Exchange may follow the
procedures specified in paragraph
(d)(4)(i) of this section, or the Exchange
may follow the procedures specified in
paragraph (d)(4)(ii) of this section. For
purposes of this paragraph (d)(4), the
Exchange reasonably expects to obtain
sufficient verification data for any
benefit year when, for the benefit year,
the Exchange is able to obtain data
about enrollment in or eligibility for
qualifying coverage in an eligible
employer sponsored plan from at least
one electronic data source that is
available to the Exchange and that has
been approved by HHS, based on
evidence showing that the data source is
sufficiently current, accurate, and
minimizes administrative burden, as
described under paragraphs (d)(2)(i) of
this section.
(i) Based on the Exchange’s
assessment of risk for inappropriate
payment of advance payments of the
premium tax credit or cost-sharing
reductions, implement a verification
process that is reasonably designed to
ensure the accuracy of the data and is
based on the activities or methods used
by an Exchange such as studies,
research, and analysis of an Exchange’s
own enrollment data, for enrollment in
or eligibility for qualifying coverage in
an eligible employer sponsored plan, as
appropriate.
(A) If, as part of the verification
process described under paragraph
(d)(4)(i) of this section, the Exchange
will be contacting any employer
identified on the application for the
applicant and the members of his or her
family, as defined in 26 CFR 1.36B–1(d),
to verify whether the applicant is
enrolled in an eligible employer
sponsored plan or is eligible for
qualifying coverage in an eligible
employer sponsored plan for the benefit
year for which coverage is requested,
the Exchange must provide notice to the
applicant;
*
*
*
*
*
(E) To carry out the process described
in paragraph (d)(4)(iii) of this section,
the Exchange must only disclose an
individual’s information to an employer
to the extent necessary for the employer
to identify the employee.
*
*
*
*
*
■ 16. Amend § 155.340 by adding
paragraph (i) to read as follows:
§ 155.340 Administration of advance
payments of the premium tax credit and
cost-sharing reductions.
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coverage lasts less than the full coverage
month. (1) For plan years beginning in
2024 and beyond, when the Exchange
determines that an individual is eligible
for advance payments of the premium
tax credit and the enrollee is enrolled in
a policy for less than the full coverage
month, including when the enrollee is
enrolled in multiple policies within a
month, each lasting less than the full
coverage month, the amount of the
advance payment of the premium tax
credit paid to the issuer of the policy
must equal the product of—
(i) The advance payments of the
premium tax credit applied to the policy
for one month of coverage divided by
the number of days in the month; and
(ii) The number of days for which
coverage is being provided in the month
under the policy described in paragraph
(i)(1)(i) of this section.
(2) [Reserved]
■ 17. Amend § 155.420 by adding
paragraph (g) to read as follows:
programmatic audit requirement
outlined in paragraph (c) of this section
by completing the required SEIPM
program process, established through 45
CFR part 155, subpart P.
■ 19. Add subpart P to read as follows:
§ 155.420
(a) Purpose. This subpart sets forth
the requirements of the State Exchange
Improper Payment Measurement
program.
(b) Definitions. As used in this
subpart—
Appeal of redetermination decision
(or appeal decision) means the HHS
appeal decision resulting from a State
Exchange’s appeal of the HHS’
redetermination decision.
Corrective action plan (CAP) means
the plan a State Exchange develops in
order to correct errors resulting in
improper payments.
Error means a finding by HHS that a
State Exchange did not correctly apply
a requirement in subparts D and E of
this part regarding eligibility for and
enrollment in a qualified health plan;
advance payments of the premium tax
credit, including the calculation of
advance payments of the premium tax
credit; redeterminations of eligibility
determinations during a benefit year; or
annual eligibility redeterminations,
which have a payment impact.
Error findings decision means the
enumeration of errors made by a State
Exchange, including a determination of
how the enumerated errors inform
improper payment estimation and
reporting requirements.
Redetermination of an error findings
decision (or redetermination decision)
means HHS’ decision resulting from a
State Exchange’s request for a
redetermination of an error findings
decision.
Review means the process of
analyzing and assessing data submitted
by a State Exchange to HHS in order to
determine a State Exchange’s
Special enrollment periods.
*
*
*
*
*
(g) Pre-enrollment special enrollment
period verification. At the option of the
Exchange, an Exchange may verify prior
to processing a qualified individual’s
plan selection that the qualified
individual is eligible for a special
enrollment period under this section. In
special circumstances where the
Exchange determines that such preenrollment special enrollment period
verification may cause undue burden on
qualified individuals, the Exchange may
provide an exception to the preenrollment special enrollment period
verification process, provided it does so
in a manner that is not based on a
prohibited discriminatory basis.
Exchanges on the Federal platform will
conduct pre-enrollment special
enrollment verification of eligibility
only for special enrollment periods
under paragraph (d)(1) of this section.
■ 18. Amend § 155.1200—
■ a. In paragraph (c) introductory text by
removing the phrase ‘‘HHS for review’’
and adding in its place the phrase,
‘‘HHS for review, unless a State
Exchange is meeting its programmatic
audit requirement for a given benefit
year under paragraph (e) of this
section’’; and
■ b. By adding paragraph (e).
The addition reads as follows.
§ 155.1200 General program integrity and
oversight requirements.
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*
*
*
*
(i) Calculation of advance payments
of the premium tax credit when policy
723
*
*
*
*
(e) State Exchange Improper Payment
Measurement (SEIPM) program. For a
given benefit year, a State Exchange may
meet the independent external
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Subpart P—State Exchange Improper
Payment Measurement Program
Sec.
155.1500 Purpose and definitions.
155.1505 Program notification and planning
process.
155.1510 Data collection.
155.1515 Review process and improper
payment rate determination.
155.1520 Error findings decisions.
155.1525 Redetermination of error findings
decisions.
155.1530 Appeal of redetermination
decision.
155.1535 Corrective action plan.
155.1540 Failure to comply.
Subpart P—State Exchange Improper
Payment Measurement Program
§ 155.1500
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compliance with subparts D and E of
this part as it relates to improper
payments.
State Exchange Improper Payment
Measurement (SEIPM) program means
the process for determining estimated
improper payments and other
information required under the Payment
Integrity Information Act of 2019, and
implementing guidance, for advance
payments of the premium tax credit,
which includes a review of a State
Exchange’s determinations regarding
eligibility for and enrollment in a
qualified health plan; the calculation of
advance payments of the premium tax
credit; redeterminations of eligibility
determinations during a benefit year;
and annual eligibility redeterminations.
§ 155.1505 Program notification and
planning process.
(a) Annual program notification.
Beginning no earlier than in 2023, prior
to the start of the measurement year,
HHS will annually issue a notification
to State Exchanges concerning
information related to the SEIPM
program and the program’s upcoming
measurement cycle, which may include
but would not be limited to review
criteria; key changes from prior
measurement cycles, where applicable;
or other modifications regarding specific
SEIPM activities.
(b) Issuance of annual program
schedule. Beginning no earlier than
2023, prior to the start of the
measurement year, HHS will annually
issue a schedule that prescribes the
timeline for the data requests in
accordance with § 155.1510.
(c) Notification of changes. In
response to the annual program
notification, the State Exchange must
provide HHS with operational and
policy information required to perform
the SEIPM review process, as well as
any operational, policy, or other
changes that may impact the SEIPM
review process within the deadline
prescribed in the annual program
schedule.
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§ 155.1510
Data collection.
(a) Requirements. For purposes of the
SEIPM program, a State Exchange must
annually submit the following eligibility
and enrollment information, in a
manner specified by HHS.
(1) Pre-sampling data.
(2) Sampled unit data.
(b) Timing. The State Exchange must
submit the data specified in paragraph
(a) of this section within the timelines
specified in the annual program
schedule described in § 155.1505(c).
HHS will consider requests for
extension when extreme circumstances
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hinder the ability of a State Exchange to
submit data in accordance with the
requirements of this section.
(c) Compliance. Failure to timely
provide the information in accordance
with paragraph (a) or (b) of this section
may result in one or more error findings
during the review based upon
insufficient data to support that the
State was in compliance with subparts
D and E of this part as it relates to
advance payments of premium tax
credits.
§ 155.1515 Review process and improper
payment rate determination.
(a) Receipt of data. HHS will maintain
a record of status of receipt for the
information that is requested from each
State Exchange for a minimum of 10
years.
(b) Review of records. For each
sampled record, HHS will review the
information provided by the State
Exchange. The review will determine
whether any errors were made in a State
Exchange’s determinations regarding
eligibility for and enrollment in a
qualified health plan; advance payments
of the premium tax credit, including the
calculation of advance payments of the
premium tax credit; redeterminations of
eligibility determinations during a
benefit year; and annual eligibility
redeterminations.
(c) Improper payment rate. HHS will
notify each State Exchange of HHS’
error findings decisions for that State
Exchange and HHS’ estimate of that
State Exchange’s improper payment
rate.
§ 155.1520
Error findings decisions.
(a) Issuance of error findings
decisions. Upon completion of the
review, HHS will issue the error
findings decision to the State Exchange.
(b) Content of error findings decision.
The error findings decisions at a
minimum will include:
(1) The review findings regarding any
errors made by the State Exchange.
(2) Information regarding the State
Exchange’s right to request a
redetermination of the error findings
decision in accordance with § 155.1525.
§ 155.1525 Redetermination of error
findings decisions.
(a) Request for redetermination. A
State Exchange may request a
redetermination of error findings
decision within the deadline prescribed
by the annual program schedule. During
the period for a State Exchange to
request a redetermination of the error
findings decision, HHS will consider a
request for an extension in extreme
circumstances, which includes but is
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not limited to situations such as natural
disasters, interruptions in business
operations such as major system
failures, or other extreme circumstances.
At a minimum, the request for
redetermination must include:
(1) The error(s) for which the State
Exchange is requesting a
redetermination;
(2) All data and information that
supports the State Exchange’s request
for a redetermination; and
(3) An explanation of how the data
and information pertains to the error(s)
specified in (a)(1).
(b) Issuance of redetermination
decision. The redetermination of an
error findings decision will be issued
within the deadline prescribed by the
annual program schedule. A State
Exchange will be notified of any delays
in the issuance in the redetermination of
an error findings decision.
(c) Content of redetermination
decision. HHS’ redetermination of an
error findings decision, at a minimum,
will include:
(1) HHS’ findings regarding the
impact of the additional data and
information provided by the State
Exchange on the error(s) for which the
State Exchange requested a
redetermination,
(2) Information regarding the State
Exchange’s right to request an appeal of
the redetermination of the error findings
decision in accordance with § 155.1530.
§ 155.1530
decision.
Appeal of redetermination
(a) Request for appeal. A State
Exchange may request an appeal of a
redetermination decision within the
deadline prescribed by the annual
program schedule. The request for
appeal must indicate the specific
error(s) identified in the
redetermination decision for which the
State Exchange is requesting an appeal.
(b) On-the-record review. Additional
data or information, beyond that
submitted during the redetermination
request, will not be considered in
rendering the appeal decision.
(c) Issuance of appeal decision. The
appeal decision will be issued within
the deadline prescribed in the annual
program schedule unless there is a
delay. A State Exchange will be notified
of any delays in the issuance of the
appeal decision.
(d) Content of appeal decision. HHS’
appeal decision will include:
(1) The findings regarding the error(s)
for which an appeal was requested. The
findings will be limited to those error(s)
identified in the request for an appeal.
(2) The final disposition of the appeal
request.
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(e) Final report. Upon completion of
the review and the closure of all
appeals, HHS may issue a report
containing the error findings and the
estimated improper payment rate.
§ 155.1535
Corrective action plan.
(a) Corrective action plan. Based on a
State Exchange’s error rate for a given
benefit year, HHS, in its reasonable
discretion, may require the State
Exchange to develop and submit a
corrective action plan to correct errors
resulting in improper payments.
(b) Content of proposed corrective
action plan. A State Exchange’s
corrective action plan must be
developed in accordance with
Appendix C to Office of Management
and Budget Circular No. A–123.
(c) Implementation and evaluation of
corrective action plan. A State Exchange
must develop an implementation
schedule for its corrective action plan,
implement the plan in accordance with
that schedule, and regularly evaluate
whether the initiatives are effective at
reducing or eliminating error causes.
(d) Failure to submit. If a State
Exchange does not submit a corrective
action plan when required, HHS may
take actions consistent with
§ 155.1540(a)(1) and (2).
§ 155.1540
Failure to comply.
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(a) Failure to comply. If a State
Exchange fails to substantially comply
with the data collection requirements or
the CAP provisions contained in this
subpart, and HHS finds that such
failures undermine or prohibit HHS’s
efficient administration of Exchange
improper payment measurement
activities, HHS may implement
measures or procedures in relation to
the State Exchange that:
(1) HHS determines are appropriate to
secure the State Exchange’s compliance
with the data collection requirements or
the CAP provisions contained in subpart
P, and to detect, prevent or reduce
abuses in the administration of advance
payments of the premium tax credit
under title I of the ACA; and
(2) the Secretary has authority to
implement under title I of the
Affordable Care Act or any other Federal
law.
(b) [Reserved]
PART 156—HEALTH INSURANCE
ISSUER STANDARDS UNDER THE
AFFORDABLE CARE ACT, INCLUDING
STANDARDS RELATED TO
EXCHANGES
20. The authority citation for part 156
is revised to read as follows:
■
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Authority: 42 U.S.C. 18021–18024, 18031–
18032, 18041–18042, 18044, 18054, 18061,
18063, 18071, 18082, and 26 U.S.C. 36B.
21. Amend § 156.50 by—
a. Removing paragraph (c)(3); and
b. Revising paragraphs (d)(1)
introductory text, (d)(2)(i)(A) and (B),
(d)(2)(ii), (d)(2)(iii)(B), (d)(3)
introductory text, (d)(4) and (6), and
(d)(7) introductory text.
The revisions read as follows:
■
■
■
§ 156.50
Financial support.
*
*
*
*
*
(d) * * *
(1) A participating issuer offering a
plan through a federally-facilitated
Exchange or State Exchange on the
Federal platform may qualify for an
adjustment of the federally-facilitated
Exchange user fee specified in
paragraph (c)(1) of this section or the
State Exchange on the Federal platform
user fee specified in paragraph (c)(2) of
this section, to the extent that the
participating issuer—
*
*
*
*
*
(2) * * *
(i) * * *
(A) Identifying information for the
participating issuer and each third party
administrator that received a copy of the
self-certification referenced in 26 CFR
54.9815–2713A(a)(4) or with respect to
which the participating issuer seeks an
adjustment of the user fee specified in
paragraph (c)(1) or (2) of this section, as
applicable, whether or not the
participating issuer was the entity that
made the payments for contraceptive
services;
(B) Identifying information for each
self-insured group health plan with
respect to which a copy of the selfcertification referenced in 26 CFR
54.9815–2713A(a)(4) or 29 CFR
2590.715–2713A(a)(4) was received by a
third party administrator and with
respect to which the participating issuer
seeks an adjustment of the user fee
specified in paragraph (c)(1) or (2) of
this section, as applicable; and
*
*
*
*
*
(ii) Each third party administrator that
intends to seek an adjustment on behalf
of a participating issuer of the federallyfacilitated Exchange user fee or the
State-based Exchange on the Federal
platform user fee based on payments for
contraceptive services, must submit to
HHS a notification of such intent, in a
manner specified by HHS, by the 60th
calendar day following the date on
which the third party administrator
receives the applicable copy of the selfcertification referenced in 26 CFR
54.9815–2713A(a)(4) or 29 CFR
2590.715–2713A(a)(4).
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725
(iii) * * *
(B) Identifying information for each
self-insured group health plan with
respect to which a copy of the selfcertification referenced in 26 CFR
54.9815–2713A(a)(4) or 29 CFR
2590.715–2713A(a)(4) was received by
the third party administrator and with
respect to which the participating issuer
seeks an adjustment of the user fee
specified in paragraph (c)(1) or (2) of
this section, as applicable;
*
*
*
*
*
(3) If the requirements set forth in
paragraph (d)(2) of this section are met,
the participating issuer will be provided
a reduction in its obligation to pay the
user fee specified in paragraph (c)(1) or
(2) of this section, as applicable, equal
in value to the sum of the following:
*
*
*
*
*
(4) If the amount of the adjustment
under paragraph (d)(3) of this section is
greater than the amount of the
participating issuer’s obligation to pay
the user fee specified in paragraph (c)(1)
or (2) of this section, as applicable, in
a particular month, the participating
issuer will be provided a credit in
succeeding months in the amount of the
excess.
*
*
*
*
*
(6) A participating issuer that receives
an adjustment in the user fee specified
in paragraph (c)(1) or (2) of this section
for a particular calendar year must
maintain for 10 years following that
year, and make available upon request
to HHS, the Office of the Inspector
General, the Comptroller General, and
their designees, documentation
demonstrating that it timely paid each
third party administrator with respect to
which it received any such adjustment
any amount required to be paid to the
third party administrator under
paragraph (d)(5) of this section.
(7) A third party administrator of a
plan with respect to which an
adjustment of the user fee specified in
paragraph (c)(1) or (2) of this section is
received under this section for a
particular calendar year must maintain
for 10 years following that year, and
make available upon request to HHS,
the Office of the Inspector General, the
Comptroller General, and their
designees, all of the following
documentation:
*
*
*
*
*
■ 22. Amend § 156.111 by—
■ a. Revising the section heading;
■ b. Revising paragraph (d) and
paragraph (e) introductory text; and
■ c. Removing paragraph (f).
The revisions read as follows:
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§ 156.111 State selection of EHBbenchmark plan for plan years beginning
on or after January 1, 2020.
§ 156.140
*
*
*
*
*
(d) A State must notify HHS of the
selection of a new EHB-benchmark plan
by the first Wednesday in May that is 2
years before the effective date of the
new EHB-benchmark plan.
(1) If the State does not make a
selection by the first Wednesday in May
that is 2 years before the effective date
of the new EHB-benchmark plan, or its
benchmark plan selection does not meet
the requirements of this section and
section 1302 of the ACA, the State’s
EHB-benchmark plan for the applicable
plan year will be that State’s EHBbenchmark plan applicable for the prior
year.
(2) [Reserved]
*
*
*
*
*
(e) A State changing its EHBbenchmark plan under this section must
submit documents in a format and
manner specified by HHS by the first
Wednesday in May that is 2 years before
the effective date of the new EHBbenchmark plan. These must include:
*
*
*
*
*
■ 23. Amend § 156.115 by revising
paragraph (b)(2) to read as follows:
§ 156.115
Provision of EHB.
*
*
*
*
*
(b) * * *
(2) An issuer may substitute a benefit
within the same EHB category, unless
prohibited by applicable State
requirements. Substitution of benefits
between EHB categories is not
permitted.
*
*
*
*
*
■ 24. Amend § 156.125 by revising
paragraph (a) to read as follows:
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§ 156.125
Prohibition on discrimination.
(a) An issuer does not provide EHB if
its benefit design, or the implementation
of its benefits design, discriminates
based on an individual’s age, expected
length of life, present or predicted
disability, degree of medical
dependency, quality of life, or other
health conditions. A non-discriminatory
benefit design that provides EHB is one
that is clinically-based, incorporates
evidence-based guidelines into coverage
and programmatic decisions, and relies
on current and relevant peer-reviewed
medical journal article(s), practice
guidelines, recommendations from
reputable governing bodies, or similar
sources.
*
*
*
*
*
■ 25. Amend § 156.140 by revising
paragraph (c) to read as follows:
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Levels of coverage.
*
*
*
*
*
(c) De minimis variation. (1) For plan
years beginning on or after January 1,
2018 through December 31, 2022, the
allowable variation in the AV of a health
plan that does not result in a material
difference in the true dollar value of the
health plan is ¥4 percentage points and
+2 percentage points, except if a health
plan under paragraph (b)(1) of this
section (a bronze health plan) either
covers and pays for at least one major
service, other than preventive services,
before the deductible or meets the
requirements to be a high deductible
health plan within the meaning of
section 223(c)(2) of the Internal Revenue
Code, in which case the allowable
variation in AV for such plan is ¥4
percentage points and +5 percentage
points.
(2) For plan years beginning on or
after January 1, 2023, the allowable
variation in the AV of a health plan that
does not result in a material difference
in the true dollar value of the health
plan is ¥2 percentage points and +2
percentage points, except if a health
plan under paragraph (b)(1) of this
section (a bronze health plan) either
covers and pays for at least one major
service, other than preventive services,
before the deductible or meets the
requirements to be a high deductible
health plan within the meaning of
section 223(c)(2) of the Internal Revenue
Code, in which case the allowable
variation in AV for such plan is ¥2
percentage points and +5 percentage
points.
■ 26. Amend § 156.200—
■ a. By revising paragraph (b)(3); and
■ b. In paragraph (e) by removing the
phrase ‘‘age, or sex’’ and adding in its
place the phrase ‘‘age, sex, sexual
orientation, or gender identity’’.
The revision read as follows:
§ 156.200 QHP issuer participation
standards.
*
*
*
*
*
(b) * * *
(3) Ensure that each QHP complies
with benefit design standards, as
defined in § 156.20, except that
individual market silver QHPs must
have an AV of 70 percent, with a de
minimis allowable AV variation of ¥0
percentage points and +2 percentage
points;
*
*
*
*
*
■ 27. Add § 156.201 to read as follows:
§ 156.201
Standardized options.
For plan year 2023 and subsequent
plan years, a QHP issuer in a federallyfacilitated Exchange or a State-based
Exchange on the Federal platform, other
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than an issuer that is already required
to offer standardized options under state
action taking place on or before January
1, 2020, must offer at least one
standardized QHP option, defined at
§ 155.20 of this subchapter, at every
product network type, as the term is
described in the definition of ‘‘product’’
at § 144.103 of this subchapter, metal
level, and throughout every service area
that it also offers non-standardized QHP
options, including, for silver plans, for
the income-based cost-sharing reduction
plan variations, as provided for at
§ 156.420(a), but not for the zero and
limited cost sharing plan variations, as
provided for at § 156.420(b).
■ 28. Amend § 156.230 by—
■ a. Revising paragraphs (a)(1) through
(3); and,
■ b. Removing paragraph (f).
The revisions read as follows:
§ 156.230
Network adequacy standards.
(a) * * *
(1) Each QHP issuer that uses a
provider network must ensure that the
provider network consisting of innetwork providers, and, for plans with
more than one tier of network,
specifically the provider network
consisting of in-network providers in
the tier for which the plan imposes the
lowest cost-sharing obligation, as
available to all enrollees, meets the
following standards:
(i) Includes essential community
providers in accordance with § 156.235;
(ii) Maintains a network that is
sufficient in number and types of
providers, including providers that
specialize in mental health and
substance abuse services, to ensure that
all services will be accessible without
unreasonable delay; and
(iii) Is consistent with the rules for
network plans of section 2702(c) of the
PHS Act.
(2)(i) Standards. For plan years
beginning on or after January 1, 2023, a
QHP issuer on a federally-facilitated
Exchange must comply with the
requirement in paragraph (a)(1)(ii) of
this section by:
(A) Meeting time and distance
standards established by the federallyfacilitated Exchange. Such time and
distance standards will be developed for
consistency with industry standards and
published in guidance.
(B) Meeting appointment wait time
standards established by the federallyfacilitated Exchange. Such appointment
wait time standards will be developed
for consistency with industry standards
and published in guidance.
(ii) Written justification. If a plan
applying for QHP certification to be
offered through a federally-facilitated
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Exchanges does not satisfy the network
adequacy standards described in
paragraphs (a)(2)(i)(A) and (B) of this
section, the issuer must include as part
of its QHP application a justification
describing how the plan’s provider
network provides an adequate level of
service for enrollees and how the plan’s
provider network will be strengthened
and brought closer to compliance with
the network adequacy standards prior to
the start of the plan year. The issuer
must provide information as requested
by the FFE to support this justification.
(3) The federally-facilitated Exchange
may grant an exception to the
requirements in paragraph (a)(2)(i)(A) of
this section if the Exchange determines
that making such health plan available
through such Exchange is in the
interests of qualified individuals in the
State or States in which such Exchange
operates.
*
*
*
*
*
■ 29. Amend § 156.235 by revising
paragraphs (a)(2)(i) and (b)(2)(i) to read
as follows:
providers in the plan’s service area.
Multiple providers at a single location
will count as a single essential
community provider toward both the
available essential community providers
in the plan’s service area and the
issuer’s satisfaction of the essential
community provider participation
standard. For plans that use tiered
networks, to count toward the issuer’s
satisfaction of the essential community
provider standards, providers must be
contracted within the network tier that
results in the lowest cost-sharing
obligation. For plans with two network
tiers (for example, participating
providers and preferred providers), such
as many PPOs, where cost sharing is
lower for preferred providers, only
preferred providers would be counted
towards essential community provider
standards; and
*
*
*
*
*
§ 156.235
■
Essential community providers.
(a) * * *
(2) * * *
(i) The network includes as
participating providers at least a
minimum percentage, as specified by
HHS, of available essential community
providers in each plan’s service area.
Multiple providers at a single location
will count as a single essential
community provider toward both the
available essential community providers
in the plan’s service area and the
issuer’s satisfaction of the essential
community provider participation
standard. For plans that use tiered
networks, to count toward the issuer’s
satisfaction of the essential community
provider standards, providers must be
contracted within the network tier that
results in the lowest cost-sharing
obligation. For plans with two network
tiers (for example, participating
providers and preferred providers), such
as many PPOs, where cost sharing is
lower for preferred providers, only
preferred providers will be counted
towards essential community provider
standards; and
*
*
*
*
*
(b) * * *
(2 * * *
(i) The number of its providers that
are located in Health Professional
Shortage Areas or five-digit zip codes in
which 30 percent or more of the
population falls below 200 percent of
the Federal poverty level satisfies a
minimum percentage, specified by HHS,
of available essential community
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Subpart D—Standards for Qualified
Health Plan Issuers for Specific Types
of Exchanges
30. Revise the subpart D heading to
read as set forth above.
■ 31. Amend § 156.340 by revising
paragraphs (a) and (b)(4) and (5) to read
as follows:
§ 156.340 Standards for downstream and
delegated entities.
(a) General requirement. Effective
October 1, 2013, notwithstanding any
relationship(s) that a QHP issuer may
have with delegated and downstream
entities, a QHP issuer maintains
responsibility for its compliance and the
compliance of any of its delegated or
downstream entities with all applicable
Federal standards related to Exchanges.
The applicable standards depend on the
Exchange model type in which the QHP
is offered, as described in paragraph
(a)(1) and (2) of this section.
(1) QHP issuers participating in
Exchange models that do not use the
Federal platform, including State
Exchanges and State Exchange SHOPs.
QHP issuers maintain responsibility for
ensuring their downstream and
delegated entities comply with the
Federal standards related to Exchanges,
including the standards in of subpart C
of this part with respect to each of its
QHPs on an ongoing basis, as well as the
Exchange processes, procedures, and
standards in accordance with subparts
H and K of part 155 and, in the small
group market, §§ 155.705 and 155.706 of
this subchapter, unless the standard is
specifically applicable to a federallyfacilitated Exchange or FF–SHOP;
(2) QHP issuers participating in
Exchanges that use the Federal platform,
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727
including federally-facilitated
Exchanges, FF–SHOPs, SBE–FPs, and
SBE–FP–SHOPs. QHP issuers maintain
responsibility for ensuring their
downstream and delegated entities
comply with Federal standards related
to Exchanges, including the standards in
subpart C of part 156 with respect to
each of its QHPs on an ongoing basis, as
well as the Exchange processes,
procedures, and standards in
accordance with subparts H and K of
part 155 of this subchapter and, in the
small group market, §§ 155.705 and
155.706 of this subchapter if applicable
to the Exchange type in which the QHP
issuer is operating. QHP issuers are also
responsible for their downstream and
delegated entities’ compliance with the
standards of § 155.220 of this
subchapter with respect to assisting
with enrollment in QHPs, and to the
standards of §§ 156.705 and 156.715 of
this subchapter for maintenance of
records and compliance reviews if
applicable to the Exchange type in
which the QHP issuer is operating.
(b) * * *
(4) Specify that the delegated or
downstream entity must permit access
by the Secretary and the OIG or their
designees in connection with their right
to evaluate through audit, inspection, or
other means, to the delegated or
downstream entity’s books, contracts,
computers, or other electronic systems,
including medical records and
documentation, relating to the QHP
issuer’s obligations in accordance with
Federal standards under paragraph (a) of
this section until 10 years from the final
date of the agreement period;
(5) All agreements between issuers
offering QHPs through an Exchange and
delegated or downstream entities the
issuers engage to support the issuer’s
activities on an Exchange must include
text under which the language stating
that the relevant Exchange authority
may demand and receive the delegated
or downstream entity’s books, contracts,
computers, or other electronic systems,
including medical records and
documentation, relating to the QHP
issuer’s obligations in accordance with
Federal standards under paragraph (a) of
this section until 10 years from the final
date of the agreement period.
■ 32. Amend § 156.400 by revising the
definition of ‘‘De minimis variation for
a silver plan variation’’ to read as
follows:
§ 156.400
Definitions.
*
*
*
*
*
De minimis variation for a silver plan
variation means a ¥0 percentage point
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and +1 percentage point allowable AV
variation.
*
*
*
*
*
■ 33. Amend § 156.430 by revising
paragraphs (b)(1), (d) introductory text,
(e) introductory text, and (e)(1) to read
as follows:
§ 156.430 Payment for cost-sharing
reductions.
*
*
*
*
(b) * * *
(1) When there is an appropriation to
make cost-sharing reduction payments
to QHP issuers, a QHP issuer will
receive periodic advance payments from
HHS to the extent permitted by the
appropriation and calculated in
accordance with § 155.1030(b)(3) of this
subchapter.
*
*
*
*
*
(d) Cost-sharing reductions data
submissions. HHS will periodically
provide a submission window for
issuers to submit cost-sharing reduction
data documenting cost-sharing
reduction amounts issuers paid, as
specified in paragraphs (d)(1) and (2) of
this section, in a form and manner
specified by HHS in guidance,
calculated in accordance with paragraph
(c) of this section. When HHS makes
cost-sharing reduction payments to QHP
issuers, HHS will notify QHP issuers
that the submission of the cost-sharing
data is mandatory for those issuers
having received cost-sharing reduction
payments for any part of the benefit year
and voluntary for other issuers, and
HHS will use the data to reconcile
advance cost-sharing reduction
payments to issuers against the actual
amounts of cost-sharing reductions QHP
issuers provided, as determined by HHS
based on amounts specified in
paragraphs (d)(1) and (2) of this section,
as calculated in accordance with
paragraph (c) of this section. In the
absence of an appropriation to make
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cost-sharing reduction payments to
issuers, HHS will notify QHP issuers
that the submission of the cost-sharing
data is voluntary. The cost-sharing data
that must be submitted in either a
voluntary or mandatory submission
includes:
*
*
*
*
*
(e) Cost-sharing reductions payments
and charges. If the actual amounts of
cost-sharing reductions determined by
HHS based on amounts described in
paragraphs (d)(1) and (2) of this section
are—
(1) More than the amount of advance
payments HHS provided, and the QHP
issuer has timely provided the data of
actual amounts of cost-sharing
reductions as required under paragraph
(c) of this section, if an appropriation is
available to make cost-sharing payments
to QHP issuers, HHS will make a
payment to the QHP issuer for the
difference; or
*
*
*
*
*
§ 156.1230
[Amended]
34. Amend § 156.1230 in paragraph
(b)(2) by removing the phrase ‘‘age, or
sex’’ and adding in its place the phrase
‘‘age, sex, sexual orientation, or gender
identity’’.
■
PART 158—ISSUER USE OF PREMIUM
REVENUE: REPORTING AND REBATE
REQUIREMENTS
35. The authority citation for part 158
continues to read as follows:
■
Authority: 42 U.S.C. 300gg–18.
36. Amend § 158.140 by revising
paragraph (b)(2)(iii) to read as follows:
■
§ 158.140 Reimbursement for clinical
services provided to enrollees.
*
*
*
(b) * * *
(2) * * *
PO 00000
Frm 00146
*
*
(iii) The amount of incentive and
bonus payments made to providers that
are tied to clearly defined, objectively
measurable, and well-documented
clinical or quality improvement
standards that apply to providers.
*
*
*
*
*
■ 37. Amend § 158.150 by revising
paragraph (a) to read as follows:
§ 158.150 Activities that improve health
care quality.
(a) General requirements. The report
required in § 158.110 must include
expenditures directly related to
activities that improve health care
quality, as such activities are described
in this section.
*
*
*
*
*
■ 38. Amend § 158.170 by revising
paragraph (b) introductory text to read
as follows:
§ 158.170
Allocation of expenses.
*
*
*
*
*
(b) Description of the methods used to
allocate expenses. The report required
in § 158.110 must include a detailed
description of the methods used to
allocate expenses, including incurred
claims, quality improvement expenses,
Federal and State taxes and licensing or
regulatory fees, and other non-claims
costs, to each health insurance market
in each State. A detailed description of
each expense element must be provided,
including how each specific expense
meets the criteria for the type of expense
in which it is categorized, as well as the
method by which it was aggregated.
*
*
*
*
*
Dated: December 23, 2021.
Xavier Becerra,
Secretary, Department of Health and Human
Services.
[FR Doc. 2021–28317 Filed 12–28–21; 4:15 pm]
BILLING CODE 4120–01–P
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]]>Agencies
[Federal Register Volume 87, Number 3 (Wednesday, January 5, 2022)]
[Proposed Rules]
[Pages 584-728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28317]
[[Page 583]]
Vol. 87
Wednesday,
No. 3
January 5, 2022
Part III
Department of Health and Human Services
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45 CFR Parts 144, 147, 153, et al.
Patient Protection and Affordable Care Act; HHS Notice of Benefit and
Payment Parameters for 2023; Proposed Rule
Federal Register / Vol. 87 , No. 3 / Wednesday, January 5, 2022 /
Proposed Rules
[[Page 584]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 144, 147, 153, 155, 156 and 158
[CMS-9911-P]
RIN 0938-AU65
Patient Protection and Affordable Care Act; HHS Notice of Benefit
and Payment Parameters for 2023
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule includes proposed payment parameters and
provisions related to the risk adjustment and risk adjustment data
validation programs, as well as proposed 2023 user fee rates for
issuers offering qualified health plans (QHPs) through federally-
facilitated Exchanges and State-based Exchanges on the Federal
platform. This proposed rule also proposes requirements related to
prohibiting discrimination based on sexual orientation and gender
identity; guaranteed availability; the offering of QHP standardized
options through Exchanges on the Federal platform; requirements for
agents, brokers, web-brokers, and issuers assisting consumers with
enrollment through Exchanges that use the Federal platform;
verification standards related to employer sponsored coverage; Exchange
eligibility determinations during a benefit year; special enrollment
period verification; cost-sharing requirements; Essential Health
Benefits (EHBs); Actuarial Value (AV); QHP issuer quality improvement
strategies; accounting for quality improvement activity (QIA) expenses
and provider incentives for medical loss ratio (MLR) reporting and
rebate calculation purposes; re-enrollment, and requirements related to
a new State Exchange improper payment measurement program. This
proposed rule also seeks comment on how HHS can advance health equity
through QHP certification standards and otherwise in the individual and
group health insurance markets, and how HHS might address plan choice
overload in the Exchanges.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on January 27, 2022.
ADDRESSES: In commenting, please refer to file code CMS-9911-P.
You may submit comments in one of three ways (please choose only
one of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9911-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9911-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Jeff Wu, (301) 492-4305, Rogelyn McLean, (301) 492-4229, Grace
Bristol, (410) 786-8437, Sara Rosta, (301) 492-4223, or Kaye Wells,
(301) 492-4301, for general information.
Cam Moultrie Clemmons, (206) 615-2338, or Anthony Galace, (301)
492-4400, for matters related to past-due premiums.
Allison Yadsko, (410) 786-1740, John Barfield, (301) 492-4433, or
Jacqueline Wilson, (301) 492-4286 for matters related to risk
adjustment or risk adjustment data validation (HHS-RADV).
Aaron Franz, (410) 786- 8027, or John Barfield, (301) 492-4433, for
matters related to federally-facilitated Exchange (FFE) and State-based
Exchange on the Federal platform (SBE-FP) user fees.
Nora Simmons, (410) 786-1981, for matters related to advance
payment of the premium tax credit (APTC) proration.
Aaron Franz, (410) 786- 8027, or Hi'ilei Haru, 301-492-4363, for
matters related to cost-sharing reduction reconciliation.
Josh Van Drei, (410) 786-1659, for matters related to actuarial
value (AV).
Becca Bucchieri, (301) 492-4341, for matters related to essential
health benefit (EHB)-benchmark plans and defrayal of state-required
benefits.
Marisa Beatley, (301) 492-4307, for matters related to employer
sponsored coverage verification.
Susan Kalmus, (301) 492-4275, for matters related to agent, broker,
and web-broker guidelines. Dena Nelson, 240-401-3535, or Carly Rhyne,
301-492-4188, for matters related to income calculation for eligibility
for advance payments of premium tax credits.
Katherine Bentley, (301) 492-5209, or Ariel Kennedy, (301) 492-
4306, for matters related to special enrollment period verification.
Leigha Basini, (301) 492-4380, for matters related to
nondiscrimination based on sexual orientation and gender identity; and
EHB nondiscrimination.
Christina Whitefield, (301) 492-4172, for matters related to the
medical loss ratio (MLR) program.
Nidhi Singh Shah, (301) 492-5110, for matters related to quality
improvement strategy standards for Exchanges.
Erika Ourisman, (301) 492-4170, for matters related to downstream
and delegated entities.
Nikolas Berkobien, (301) 492-4400, or Leigha Basini, (301) 492-4380
for matters related to standardized options.
Erika Melman, (301) 492-4348, Deborah Hunter, (443) 386-3651, or
Whitney Allen, (667) 290-8748, for matters related to network adequacy
and essential community providers.
Linus Bicker, (803) 931-6185, for matters related to State Exchange
improper payment measurement.
Phuong Van, (202) 570-5594, for matters related to advancing health
equity through qualified health plans (QHPs).
Angelica Torres-Reid, (410) 786-1721, and Robert Yates, (301) 492-
5151, for matters related to State Exchange general program integrity
and oversight requirements.
Zarah Ghiasuddin, (301) 492-4308, for matters related to re-
enrollment in the Exchanges.
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post comments received before the close of the comment period on the
following website as soon as possible after they have been received:
https://www.regulations.gov. Follow the search instructions on that
website to view public comments. CMS will not post on Regulations.gov
public comments that make threats to individuals or institutions or
suggest that the individual will take actions to harm the individual.
CMS continues to encourage individuals not to submit duplicative
comments. We will post acceptable comments from multiple unique
commenters even if the content is identical or nearly identical to
other comments.
[[Page 585]]
Table of Contents
I. Executive Summary
II. Background
A. Legislative and Regulatory Overview
B. Stakeholder Consultation and Input
C. Structure of Proposed Rule
III. Provisions of the Proposed HHS Notice of Benefit and Payment
Parameters for 2023
A. Part 144--Requirements Relating to Health Insurance Coverage
B. Part 147--Health Insurance Reform Requirements for the Group
and Individual Health Insurance Markets
C. Part 153--Standards Related to Reinsurance, Risk Corridors,
and Risk Adjustment
D. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
E. Part 156--Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges
F. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
G. Solicitation of Comments Regarding Health Equity and
Qualified Health Plans
IV. Collection of Information Requirements
A. Wage Estimates
B. ICRs Regarding State Flexibility for Risk Adjustment (Sec.
153.320)
C. ICRs Regarding Distributed Data and Risk Adjustment Data
Submission Requirements (Sec. Sec. 153.610, 153.700, and 153.710)
D. ICRs Regarding Ability of States To Permit Agents and Brokers
and Web-brokers To Assist Qualified Individuals, Qualified
Employers, or Qualified Employees Enrolling in QHPs (Sec. 155.220)
E. ICRs Regarding Verification of Eligibility for Special
Enrollment Periods (Sec. 155.420)
F. ICRs Regarding General Program Integrity and Oversight
Requirements (Sec. 155.1200)
G. ICRs Regarding State Exchange Improper Payment Measurement
program (Sec. Sec. 155.1500-155.1540)
H. ICRs Regarding State Selection of EHB-Benchmark Plan for Plan
Years Beginning on or After January 1, 2020 (Sec. 156.111)
I. ICR Regarding Differential Display of Standardized Options on
the websites of Web-Brokers (Sec. 155.220) and QHP Issuers (Sec.
156.265)
J. ICRs Regarding Network Adequacy and Essential Community
Providers (Sec. Sec. 156.230 and 156.235)
K. ICRs Regarding Payment for Cost-Sharing Reductions (Sec.
156.430)
L. ICRs Regarding Quality Improvement Strategy (Sec. 156.1130)
M. ICRs Regarding Medical Loss Ratio (Sec. Sec. 158.140,
158.150, 158.170)
O. Summary of Annual Burden Estimates for Proposed Requirements
P. Submission of PRA-related Comments
V. Response to Comments
VI. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Impact Estimates of the Payment Notice Provisions and
Accounting Table
D. Regulatory Alternatives Considered
E. Regulatory Flexibility Act
F. Unfunded Mandates
G. Federalism
I. Executive Summary
American Health Benefit Exchanges, or ``Exchanges,'' are entities
established under the Patient Protection and Affordable Care Act (ACA)
\1\ through which qualified individuals and qualified employers can
purchase health insurance coverage in qualified health plans (QHPs).
Many individuals who enroll in QHPs through individual market Exchanges
are eligible to receive a premium tax credit (PTC) to reduce their
costs for health insurance premiums and to receive reductions in
required cost-sharing payments to reduce out-of-pocket expenses for
health care services. The ACA also established the risk adjustment
program, which transfers funds from issuers that attract lower-than-
average risk populations to issuers that attract higher-than-average
risk populations to reduce incentives for issuers to avoid higher-risk
enrollees.
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\1\ The Patient Protection and Affordable Care Act (Pub. L. 111-
148) was enacted on March 23, 2010. The Healthcare and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and
revised several provisions of the Patient Protection and Affordable
Care Act, was enacted on March 30, 2010. In this rulemaking, the two
statutes are referred to collectively as the ``Patient Protection
and Affordable Care Act'', ``Affordable Care Act'', or ``ACA.''
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In previous rulemakings, we established provisions and parameters
to implement many ACA requirements and programs. In this proposed rule,
we propose to amend some of these provisions and parameters, with a
focus on maintaining a stable regulatory environment. These proposed
changes are intended to provide issuers with greater predictability for
upcoming plan years (PYs), while simultaneously enhancing the role of
states in these programs. The proposals would provide states with
additional flexibilities, reduce unnecessary regulatory burdens on
stakeholders, empower consumers, ensure program integrity, and improve
affordability.
On January 20, 2021, the President issued an Executive Order which
stated the Administration's policy on preventing and combating
discrimination on the basis of gender identity and sexual
orientation.\2\ This Executive Order instructed the Secretary of Health
and Human Services (Secretary of HHS, or HHS Secretary) to review all
existing regulations, guidance documents, and other agency actions to
determine whether they are consistent with the aforementioned policy,
and to consider whether to suspend, revise, or rescind any agency
actions that are inconsistent with it. In consideration of this
Executive Order, and as a result of our review of certain regulations,
we propose to amend HHS regulations such that Exchanges, issuers, and
agents and brokers are prohibited from discriminating based on sexual
orientation and gender identity. The provisions in this proposed rule
reflect the aspects of the Executive Order 13988 and aligns with the
HHS' Notice, released on May 10, 2021, that HHS interprets and enforces
section 1557's and Title IX's prohibition on discrimination on the
basis of sex to include: (1) Discrimination on the basis of sexual
orientation; and (2) discrimination on the basis of gender identity,
based on the Supreme Court's decision in Bostock v. Clayton County.\3\
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\2\ Executive Order 13988 on Preventing and Combating
Discrimination on the Basis of Gender Identity or Sexual
Orientation, January 20, 2021, see 86 FR 7023.
\3\ U.S. Dep't of Health & Hum. Servs., Notification of
Interpretation and Enforcement of Section 1557 of the Affordable
Care Act and Title IX of the Education Amendments of 1972, 86 FR
27984 (May 25, 2021). Also see, Bostock v. Clayton County, 140 S.
Ct. 1731 (2020). https://www.supremecourt.gov/opinions/19pdf/17-1618_hfci.pdf.
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Risk adjustment continues to be a core program in the individual,
small group, and merged markets both on and off Exchanges, and we
propose recalibrated parameters for the HHS-operated risk adjustment
methodology. We published a technical paper, the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes \4\ in October
2021, and sought comment on potential updates to the risk adjustment
models. Consistent with the model changes discussed in the October 2021
Risk Adjustment (RA) Technical Paper, in this rule, we propose the
following three updates to the HHS risk adjustment models beginning
with the 2023 benefit year: (1) Adding a two-stage weighted approach to
the adult and child models; (2) removing the current severity illness
factors from the adult models and adding an interacted hierarchical
condition category (HCC) count model specification to the adult and
child models; and (3) replacing the current enrollment duration factors
in the adult models with HCC-contingent enrollment duration factors.
These proposals are intended to improve prediction in the adult and
child risk adjustment models for the lowest-risk enrollees, the
highest-risk enrollees, and partial-year enrollees, whose plan
liabilities are underpredicted in the
[[Page 586]]
current models. We also propose to recalibrate the 2023 benefit year
risk adjustment models using the 2017, 2018, and 2019 enrollee-level
External Data Gathering Environment (EDGE) data. We further propose to
continue applying a market pricing adjustment to the plan liability
associated with Hepatitis C drugs in the risk adjustment models,
consistent with the approach adopted beginning with the 2020 models. We
discuss our consideration of the targeted removal of the mapping of
hydroxychloroquine sulfate to Immune Suppressants and Immunomodulators
(RXC 09) in the 2018 and 2019 benefit year enrollee-level EDGE data
used for the 2023 benefit year model recalibration,\5\ as well as the
targeted removal of Descovy[supreg] from mapping to Anti-HIV Agents
(RXC 01) in all three benefit years' enrollee-level EDGE datasets used
for the 2023 benefit year model recalibration. We also propose for the
2024 benefit year and beyond to recalibrate the adult models using the
final, fourth quarter (Q4) RXC mapping document that was applicable for
each benefit year of data that is included in the current year's model
recalibration. We propose to begin to use this approach for
recalibration of the 2023 adult risk adjustment models, with the
exception of the 2017 enrollee-level EDGE data year, for which we
propose to use the most recent RXC mapping document that was available
when we first processed the 2017 enrollee-level EDGE data (that is, Q2
2018).
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\4\ Available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\5\ The same concern was not present for the 2016 or 2017
enrollee-level EDGE data because hydroxychloroquine was not included
in the crosswalk until 2018.
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Additionally, we propose to repeal the ability of states to request
a reduction in risk adjustment state transfers starting with the 2024
benefit year, while proposing to provide an exception for states that
previously requested a reduction to transfers under Sec. 153.320(d).
In addition, we solicit comments on the requests from Alabama to reduce
risk adjustment state transfers for the 2023 benefit year in the
individual (including the catastrophic and non-catastrophic risk pools)
and small group markets.
We also propose the 2023 benefit year risk adjustment user fee for
states where HHS operates the risk adjustment program. We also propose
to collect and extract five new data elements including ZIP code, race,
ethnicity, individual coverage health reimbursement arrangement (ICHRA)
indicator, and a subsidy indicator as part of the required risk
adjustment data that issuers must make accessible to HHS in states
where HHS is operating the risk adjustment program. We also propose to
extract three new data elements issuers already provide to HHS as part
of the required risk adjustment data submissions (plan ID, rating area,
and subscriber indicator) and to expand the permitted uses of the risk
adjustment data and reports. Finally, we propose that whenever HHS
recoups high-cost risk pool funds as a result of audits of risk
adjustment covered plans, actionable discrepancies, or successful
appeals, the recouped funds would be used to reduce high-cost risk pool
charges for that national high-cost risk pool for the next applicable
benefit year for which high-cost risk pool payments have not already
been calculated.
We propose further refinements to the HHS-RADV error estimation
methodology beginning with the 2021 benefit year to (1) extend the
application of Super HCCs (which are currently based on the coefficient
estimation groups defined in the applicable benefit year's ``Additional
Adult Variables'' Table of the ``Do It Yourself (DIY)'' software (Table
6 in the 2021 Benefit Year DIY Software), which is published on the
CCIIO website) \6\ from their current application only in the sorting
step that assigns HCCs to failure rate groups to broader application
throughout the HHS-RADV error rate calculation process, (2) specify
that Super HCCs will be defined separately according to the age group
model to which an enrollee is subject, and (3) constrain to zero any
failure rate group outlier with a negative failure rate, regardless of
whether the outlier issuer has a negative or positive error rate.
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\6\ https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance. The August 3, 2021 version of the 2021 DIY Software Tables
is available at https://www.cms.gov/files/document/cy2021-diy-tables-07092021.xlsx.
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As we do every year in the HHS notice of benefit and payment
parameters, we propose updated parameters applicable in the individual
and small group markets. We propose the PY 2023 user fee rates for
issuers offering plans through the Exchanges using the Federal
platform. We propose maintaining the Federal-facilitated Exchange (FFE)
and State-based Exchange on the Federal platform (SBE-FP) user fees at
the current PY 2022 rates, 2.75 and 2.25 percent of total monthly
premiums, respectively, in order to preserve and ensure that the FFEs
and Federal platform have sufficient funding to cover the cost of all
special benefits provided to FFE and SBE-FP issuers during PY 2023. We
also note that HHS will issue the 2023 benefit year premium adjustment
percentage index and related payment parameters in guidance, consistent
with the policy finalized in part 2 of the 2022 Payment Notice.
We also propose to require all Exchanges to prorate premiums and
advance payments of the premium tax credit (APTC) when administering
APTC for enrollees enrolled in a particular policy for less than the
full coverage month, including when the enrollee is enrolled in
multiple policies within a month, each lasting less than the full
coverage month.
We are proposing changes to clarify that the cost-sharing reduction
(CSR) data submission process is mandatory only for those issuers that
received CSR payments from HHS for any part of the benefit year, and
voluntary for other issuers. We propose a technical correction to the
definition of large group market in Sec. 144.103 to delete the
concluding phrase ``unless otherwise provided under state law.''
We propose new display requirements for web-broker non-Exchange
websites, including requirements related to QHP comparative information
and standardized disclaimer language; a prohibition on displaying QHP
advertisements or otherwise providing favored or preferred display of
QHPs based on compensation agents, brokers, or web-brokers receive from
QHP issuers; and a requirement to prominently display a clear
explanation of the rationale for explicit QHP recommendations and the
methodology for the default display of QHPs on web-broker non-Exchange
websites to better inform and protect consumers using such websites.
We propose a number of policies to address certain agent, broker,
and web-broker practices. These policies would be added as part of the
FFE standards of conduct codified at Sec. 155.220(j)(2), improving
CMS's ability to enforce existing responsibilities agents, brokers, and
web-brokers utilizing the Exchange are required to adhere to without
substantially burdening other agents, brokers, and web-brokers, while
also providing more detail about specific business practices that are
prohibited. We believe the proposed new regulatory text would protect
consumers, ensure the efficient operation of the Exchange, minimize the
risk of future tax discrepancies, reduce unauthorized enrollments in
Exchange coverage, and provide a stronger basis for CMS to take
enforcement action against agents, brokers, and web-brokers for
violations of these requirements.
We propose revising our interpretation of the guaranteed
availability requirement to prohibit
[[Page 587]]
issuers from applying a premium payment to an individual's or
employer's past debt owed for coverage and refusing to effectuate
enrollment in new coverage. We believe this proposal would have a
positive impact on the risk pool by removing barriers to enrollment for
low-income individuals who lost prior coverage due to nonpayment of
premiums. In addition, this proposal would promote more equitable
access to health insurance coverage by ensuring that enrollment is not
delayed as a result of non-payment of past-due premiums to the same
issuer or control group, regardless of an individual's or employee's
status as an APTC recipient.
Stable and affordable Exchanges with healthy risk pools are
necessary for ensuring consumers maintain stable access to health
insurance options. In order to minimize the potential for adverse
selection in the Exchanges, we propose to allow Exchanges to conduct
risk-based employer sponsored coverage verification.
We propose to clarify that only those provider incentives and
bonuses that are tied to clearly defined, objectively measurable, and
well-documented clinical or quality improvement standards that apply to
providers may be included in incurred claims for MLR reporting and
rebate calculation purposes. We also propose to specify that only
expenses directly related to activities that improve health care
quality may be included as quality improvement activity (QIA) expenses
for MLR reporting and rebate calculation purposes.
In addition, we propose to make a technical amendment to remove a
reference to a provision that was vacated by the United States District
Court for the District of Maryland in City of Columbus, et al. v.
Cochran, 523 F. Supp. 3d 731 (D. Md. 2021), and thus deleted in part 2
of the 2022 Payment Notice final rule.
With regards to the essential health benefits (EHB), we propose an
evergreen deadline for EHB-benchmark plan applications by states, as
well as proposing to remove the ability for states to permit issuers to
substitute benefits between EHB categories. In addition, we propose
changed de minimis thresholds for the actuarial value (AV) for plans
subject to EHB requirements, as well as narrower de minimis thresholds
for individual market silver QHPs and income-based CSR plan variations.
We also propose to remove the state annual reporting requirement to
report state-required benefits in addition to the EHB to HHS. We
believe there may be ways to achieve compliance with the defrayal
policy without imposing the rigid submission requirements on states
that exist under the annual reporting requirement.
We propose policies to strengthen and clarify our network adequacy
standards, including expanding the provider specialty list for time and
distance standards and adding appointment wait time standards. For
plans with tiered networks, we propose that, to count toward the
issuer's satisfaction of the network adequacy and essential community
provider (ECP) standards, providers must be contracted within the
network tier that results in the lowest cost-sharing obligation. We
also propose to require issuers to submit information about whether
providers offer telehealth services. We propose to increase the ECP
threshold from 20 percent to 35 percent.
We also propose to amend the current regulation, which provides
that, notwithstanding any relationship or relationships a QHP issuer
may have with delegated or downstream entities, the QHP issuer
maintains responsibility for its compliance and the compliance of any
of its delegated or downstream entities with all applicable Federal
standards related to Exchanges. Specifically, HHS proposes adding a
requirement that all agreements between QHP issuers and their
downstream and delegated entities include language stating that any
Exchange authority, including State Exchanges, may demand and receive
records related to the QHP issuers' obligations and compliance with
applicable Federal standards related to Exchanges. We also propose
other amendments to extend the obligation to oversee compliance of
delegated and downstream entities to QHP issuers in all models of
Exchange. These proposals would hold QHP issuers in all models of
Exchange responsible for their downstream and delegated entities'
adherence to applicable Federal standards, and make their oversight
obligations, and the obligations of their downstream and delegated
entities, explicit. We also propose to amend the title of subpart D of
45 CFR part 156 from ``Standards for Qualified Health Plan Issuers on
Federally Facilitated Exchanges and State-Based Exchanges on the
Federal platform'' to ``Standards for Qualified Health Plan Issuers on
Specific Types of Exchanges'' to more accurately reflect the
applicability of the regulations within the subpart.
We solicit comments on incorporating the net premium, maximum out-
of-pocket (MOOP), deductible, and annual out-of-pocket costs (OOPC) of
a plan into the Exchange re-enrollment hierarchy as well as additional
criteria or mechanisms HHS could consider to ensure the Exchange
hierarchy for re-enrollment aligns with plan generosity and consumer
needs, such as, re-enrolling a current bronze QHP enrollee into an
available silver QHP with a lower net premium and higher plan
generosity offered by the same QHP issuer. We also propose to update
the quality improvement strategy (QIS) standards to require QHP issuers
to address health and health care disparities as a specific topic area
within their QIS beginning in 2023.
We also propose to require issuers of QHPs in FFEs and SBE-FPs to
offer through the Exchange standardized QHP options beginning in PY
2023.
Finally, we solicit comments regarding additional ways HHS could
incentivize QHP issuers to design plans that improve health equity and
health conditions in enrollees' environments, as well as how QHP
issuers could address other social determinants of health (SDOH)
outside of the QHP certification process.
II. Background
A. Legislative and Regulatory Overview
Title I of the Health Insurance Portability and Accountability Act
of 1996 (HIPAA) added a new title XXVII to the Public Health Service
Act (PHS Act) to establish various reforms to the group and individual
health insurance markets.
These provisions of the PHS Act were later augmented by other laws,
including the ACA. Subtitles A and C of title I of the ACA reorganized,
amended, and added to the provisions of part A of title XXVII of the
PHS Act relating to group health plans and health insurance issuers in
the group and individual markets. The term ``group health plan''
includes both insured and self-insured group health plans.\7\
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\7\ The term ``group health plan'' is used in title XXVII of the
PHS Act and is distinct from the term ``health plan'' as used in
other provisions of title I of ACA. The term ``health plan'' does
not include self-insured group health plans.
---------------------------------------------------------------------------
Section 2702 of the PHS Act, as added by the ACA, establishes
requirements for guaranteed availability of coverage in the group and
individual markets.
Section 2718 of the PHS Act, as added by the ACA, generally
requires health insurance issuers to submit an annual MLR report to
HHS, and provide rebates to enrollees if the issuers do not achieve
specified MLR thresholds.
Section 2791 of the PHS Act defines several terms, including
``large group market''.
[[Page 588]]
Section 1301(a)(1)(B) of the ACA directs all issuers of QHPs to
cover the EHB package described in section 1302(a) of the ACA,
including coverage of the services described in section 1302(b) of the
ACA, adherence to the cost-sharing limits described in section 1302(c)
of the ACA, and meeting the AV levels established in section 1302(d) of
the ACA. Section 2707(a) of the PHS Act, which is effective for plan or
policy years beginning on or after January 1, 2014, extends the
requirement to cover the EHB package to non-grandfathered individual
and small group health insurance coverage, irrespective of whether such
coverage is offered through an Exchange. In addition, section 2707(b)
of the PHS Act directs non-grandfathered group health plans to ensure
that cost sharing under the plan does not exceed the limitations
described in sections 1302(c)(1) of the ACA.
Section 1302 of the ACA provides for the establishment of an EHB
package that includes coverage of EHBs (as defined by the Secretary of
HHS), cost-sharing limits, and AV requirements. The law directs that
EHBs be equal in scope to the benefits provided under a typical
employer plan, and that they cover at least the following 10 general
categories: Ambulatory patient services; emergency services;
hospitalization; maternity and newborn care; mental health and
substance use disorder services, including behavioral health treatment;
prescription drugs; rehabilitative and habilitative services and
devices; laboratory services; preventive and wellness services and
chronic disease management; and pediatric services, including oral and
vision care. Section 1302(d) of the ACA describes the various levels of
coverage based on their AV. Consistent with section 1302(d)(2)(A) of
the ACA, AV is calculated based on the provision of EHB to a standard
population. Section 1302(d)(3) of the ACA directs the Secretary of HHS
to develop guidelines that allow for de minimis variation in AV
calculations. Sections 1302(b)(4)(A) through (D) establish that the
Secretary must define EHB in a manner that: (1) Reflects appropriate
balance among the 10 categories; (2) is not designed in such a way as
to discriminate based on age, disability, or expected length of life;
(3) takes into account the health care needs of diverse segments of the
population; and (4) does not allow denials of EHBs based on age, life
expectancy, disability, degree of medical dependency, or quality of
life.
Section 1311(c) of the ACA provides the Secretary the authority to
issue regulations to establish criteria for the certification of QHPs.
Section 1311(c)(1)(B) of the ACA requires among the criteria for
certification that the Secretary must establish by regulation that QHPs
ensure a sufficient choice of providers. Section 1311(e)(1) of the ACA
grants the Exchange the authority to certify a health plan as a QHP if
the health plan meets the Secretary's requirements for certification
issued under section 1311(c) of the ACA, and the Exchange determines
that making the plan available through the Exchange is in the interests
of qualified individuals and qualified employers in the state. Section
1311(c)(6)(C) of the ACA establishes special enrollment periods and
section 1311(c)(6)(D) of the ACA establishes the monthly enrollment
period for Indians, as defined by section 4 of the Indian Health Care
Improvement Act.\8\
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\8\ The Indian Health Care Improvement Act (IHCIA), the
cornerstone legal authority for the provision of health care to
American Indians and Alaska Natives, was made permanent when
President Obama signed the bill on March 23, 2010, as part of the
Patient Protection and Affordable Care Act.
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Section 1311(c)(1)(E) of the ACA specifies that to be certified as
a QHP, each health plan must implement a QIS, which is described in
section 1311(g)(1) of the ACA. Section 1311(g)(1) of the ACA describes
this strategy as a payment structure that provides increased
reimbursement or other incentives to improve health outcomes of plan
enrollees, to prevent hospital readmissions, improve patient safety and
reduce medical errors, promote wellness and health, and reduce health
and health care disparities.
Section 1311(d)(3)(B) of the ACA permits a state, at its option, to
require QHPs to cover benefits in addition to EHB. This section also
requires a state to make payments, either to the individual enrollee or
to the issuer on behalf of the enrollee, to defray the cost of these
additional state-required benefits.
Section 1312(c) of the ACA generally requires a health insurance
issuer to consider all enrollees in all health plans (except
grandfathered health plans) offered by such issuer to be members of a
single risk pool for each of its individual and small group markets.
States have the option to merge the individual and small group market
risk pools under section 1312(c)(3) of the ACA.
Section 1312(e) of the ACA provides the Secretary with the
authority to establish procedures under which a state may allow agents
or brokers to (1) enroll qualified individuals and qualified employers
in qualified health plans offered through Exchanges and (2) assist
individuals in applying for PTC and CSRs for qualified health plans
sold through an Exchange.
Sections 1313 and 1321 of the ACA provide the Secretary with the
authority to oversee the financial integrity of State Exchanges, their
compliance with HHS standards, and the efficient and non-discriminatory
administration of State Exchange activities. Section 1313(a)(5)(A) of
the ACA provides the Secretary with the authority to implement any
measure or procedure that the Secretary determines is appropriate to
reduce fraud and abuse in the administration of the Exchanges. Section
1321 of the ACA provides for state flexibility in the operation and
enforcement of Exchanges and related requirements.
Section 1321(a) of the ACA provides broad authority for the
Secretary to establish standards and regulations to implement the
statutory requirements related to Exchanges, QHPs and other components
of title I of the ACA, including such other requirements as the
Secretary determines appropriate. When operating an FFE under section
1321(c)(1) of the ACA, HHS has the authority under sections 1321(c)(1)
and 1311(d)(5)(A) of the ACA to collect and spend user fees. Office of
Management and Budget (OMB) Circular A-25 Revised establishes Federal
policy regarding user fees and specifies that a user charge will be
assessed against each identifiable recipient for special benefits
derived from federal activities beyond those received by the general
public.
Section 1321(d) of the ACA provides that nothing in title I of the
ACA must be construed to preempt any state law that does not prevent
the application of title I of the ACA. Section 1311(k) of the ACA
specifies that Exchanges may not establish rules that conflict with or
prevent the application of regulations issued by the Secretary.
Section 1343 of the ACA establishes a permanent risk adjustment
program to provide payments to health insurance issuers that attract
higher-than-average risk populations, such as those with chronic
conditions, funded by payments from those that attract lower-than-
average risk populations, thereby reducing incentives for issuers to
avoid higher-risk enrollees.
Section 1401(a) of the ACA amended the Internal Revenue Code (the
Code) to add Section 36B, which, among other things, requires that a
taxpayer reconcile APTC for a year of coverage with the amount of the
PTC the taxpayer is allowed for the year.
[[Page 589]]
Section 1402 of the ACA provides for, among other things,
reductions in cost sharing for EHB for qualified low- and moderate-
income enrollees in silver level qualified health plans offered through
the individual market Exchanges. This section also provides for
reductions in cost sharing for Indians enrolled in QHPs at any metal
level.
Section 1411(c) of the ACA requires the Secretary to submit certain
information provided by applicants under section 1411(b) of the ACA to
other federal officials for verification, including income and family
size information to the Secretary of the Treasury. Section 1411(d) of
the ACA provides that the Secretary must verify the accuracy of
information provided by applicants under section 1411(b) of the ACA for
which section 1411(c) does not prescribe a specific verification
procedure, in such manner as the Secretary determines appropriate.
Section 1411(f) of the ACA requires the Secretary, in consultation
with the Treasury and Homeland Security Department Secretaries and the
Commissioner of Social Security, to establish procedures for hearing
and making decisions governing appeals of Exchange eligibility
determinations. Section 1411(f)(1)(B) of the ACA requires the Secretary
to establish procedures to redetermine eligibility on a periodic basis,
in appropriate circumstances, including eligibility to purchase a QHP
through the Exchange and for APTC and CSRs.
Section 1411(g) of the ACA allows the use of applicant information
only for the limited purposes of, and to the extent necessary to,
ensure the efficient operation of the Exchange, including by verifying
eligibility to enroll through the Exchange and for APTC and CSRs, and
limits the disclosure of such information.
Section 1557 of the ACA applies certain long-standing civil rights
nondiscrimination requirements to ``any health program or activity, any
part of which is receiving Federal financial assistance, including
credits, subsidies, or contracts of insurance, or under any program or
activity that is administered by an Executive agency, or any entity
established under'' Title I of the ACA (or amendments). It did so by
referencing statutes that specify prohibited grounds of discrimination,
namely, race, color, national origin, sex, age, or disability, in an
array of federally funded and administered programs or activities.\9\
In addition, HHS has previously finalized rules unrelated to section
1557 of the ACA to address populations that have historically been
subject to discrimination.
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\9\ 42 U.S.C. 18116.
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Section 5000A of the Code, as added by section 1501(b) of the ACA,
requires individuals to have minimum essential coverage (MEC) for each
month, qualify for an exemption, or make an individual shared
responsibility payment. Under the Tax Cuts and Jobs Act, which was
enacted on December 22, 2017, the individual shared responsibility
payment is reduced to $0, effective for months beginning after December
31, 2018.\10\ Notwithstanding that reduction, certain exemptions are
still relevant to determine whether individuals age 30 and above
qualify to enroll in catastrophic coverage under Sec. Sec. 155.305(h)
and 156.155(a)(5).
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\10\ Public Law 115-97, 131 Stat. 2054 (2017).
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1. Premium Stabilization Programs
In the July 15, 2011 Federal Register (76 FR 41929), we published a
proposed rule outlining the framework for the premium stabilization
programs.\11\ We implemented the premium stabilization programs in a
final rule, published in the March 23, 2012 Federal Register (77 FR
17219) (Premium Stabilization Rule). In the December 7, 2012 Federal
Register (77 FR 73117), we published a proposed rule outlining the
benefit and payment parameters for the 2014 benefit year to expand the
provisions related to the premium stabilization programs and set forth
payment parameters in those programs (proposed 2014 Payment Notice). We
published the 2014 Payment Notice final rule in the March 11, 2013
Federal Register (78 FR 15409). In the June 19, 2013 Federal Register
(78 FR 37032), we proposed a modification to the HHS-operated
methodology related to community rating states. In the October 30, 2013
Federal Register (78 FR 65046), we finalized the proposed modification
to the HHS-operated methodology related to community rating states. We
published a correcting amendment to the 2014 Payment Notice final rule
in the November 6, 2013 Federal Register (78 FR 66653) to address how
an enrollee's age for the risk score calculation would be determined
under the HHS-operated risk adjustment methodology.
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\11\ The term premium stabilization programs refers to the risk
adjustment, risk corridors, and reinsurance programs established by
the ACA. See 42 U.S.C. 18061, 18062, and 18063.
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In the December 2, 2013 Federal Register (78 FR 72321), we
published a proposed rule outlining the benefit and payment parameters
for the 2015 benefit year to expand the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions and establishing the payment parameters in those programs
(proposed 2015 Payment Notice). We published the 2015 Payment Notice
final rule in the March 11, 2014 Federal Register (79 FR 13743). In the
May 27, 2014 Federal Register (79 FR 30240), the 2015 fiscal year
sequestration rate for the risk adjustment program was announced.
In the November 26, 2014 Federal Register (79 FR 70673), we
published a proposed rule outlining the benefit and payment parameters
for the 2016 benefit year to expand the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions and establishing the payment parameters in those programs
(proposed 2016 Payment Notice). We published the 2016 Payment Notice
final rule in the February 27, 2015 Federal Register (80 FR 10749).
In the December 2, 2015 Federal Register (80 FR 75487), we
published a proposed rule outlining the benefit and payment parameters
for the 2017 benefit year to expand the provisions related to the
premium stabilization programs, setting forth certain oversight
provisions and establishing the payment parameters in those programs
(proposed 2017 Payment Notice). We published the 2017 Payment Notice
final rule in the March 8, 2016 Federal Register (81 FR 12203).
In the September 6, 2016 Federal Register (81 FR 61455), we
published a proposed rule outlining the benefit and payment parameters
for the 2018 benefit year and to further promote stable premiums in the
individual and small group markets. We proposed updates to the risk
adjustment methodology, new policies around the use of external data
for recalibration of our risk adjustment models, and amendments to the
HHS-RADV process (proposed 2018 Payment Notice). We published the 2018
Payment Notice final rule in the December 22, 2016 Federal Register (81
FR 94058).
In the November 2, 2017 Federal Register (82 FR 51042), we
published a proposed rule outlining the benefit and payment parameters
for the 2019 benefit year, and to further promote stable premiums in
the individual and small group markets. We proposed updates to the risk
adjustment methodology and amendments to the HHS-RADV process (proposed
2019 Payment Notice). We published the 2019 Payment Notice final rule
in the April 17, 2018 Federal Register (83 FR 16930). We published a
correction to the 2019 risk adjustment coefficients in the 2019 Payment
Notice final rule in the May 11, 2018 Federal Register (83 FR 21925).
On July 27,
[[Page 590]]
2018, consistent with 45 CFR 153.320(b)(1)(i), we updated the 2019
benefit year final risk adjustment model coefficients to reflect an
additional recalibration related to an update to the 2016 enrollee-
level External Data Gathering Environment (EDGE) dataset.\12\
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\12\ ``Updated 2019 Benefit Year Final HHS Risk Adjustment Model
Coefficients.'' July 27, 2018. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf.
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In the July 30, 2018 Federal Register (83 FR 36456), we published a
final rule that adopted the 2017 benefit year risk adjustment
methodology as established in the final rules published in the March
23, 2012 (77 FR 17220 through 17252) and March 8, 2016 editions of the
Federal Register (81 FR 12204 through 12352). That final rule set forth
additional explanation of the rationale supporting use of statewide
average premium in the HHS-operated risk adjustment state payment
transfer formula for the 2017 benefit year, including the reasons why
the program is operated in a budget-neutral manner. That final rule
also permitted HHS to resume 2017 benefit year risk adjustment payments
and charges. HHS also provided guidance as to the operation of the HHS-
operated risk adjustment program for the 2017 benefit year in light of
publication of the final rule.\13\
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\13\ ``Update on the HHS-operated Risk Adjustment Program for
the 2017 Benefit Year.'' July 27, 2018. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2017-RA-Final-Rule-Resumption-RAOps.pdf.
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In the August 10, 2018 Federal Register (83 FR 39644), we published
a proposed rule seeking comment on adopting the 2018 benefit year risk
adjustment methodology in the final rules published in the March 23,
2012 (77 FR 17219) and in the December 22, 2016 editions of the Federal
Register (81 FR 94058). The proposed rule set forth additional
explanation of the rationale supporting use of statewide average
premium in the HHS-operated risk adjustment state payment transfer
formula for the 2018 benefit year, including the reasons why the
program is operated in a budget-neutral manner. In the December 10,
2018 Federal Register (83 FR 63419), we issued a final rule adopting
the 2018 benefit year HHS-operated risk adjustment methodology as
established in the final rules published in the March 23, 2012 (77 FR
17219) and the December 22, 2016 (81 FR 94058) editions of the Federal
Register. That final rule sets forth additional explanation of the
rationale supporting use of statewide average premium in the HHS-
operated risk adjustment state payment transfer formula for the 2018
benefit year, including the reasons why the program is operated in a
budget-neutral manner.
In the January 24, 2019 Federal Register (84 FR 227), we published
a proposed rule outlining updates to the calibration of the risk
adjustment methodology, the use of EDGE data for research purposes, and
updates to HHS-RADV audits. We published the 2020 Payment Notice final
rule in the April 25, 2019 Federal Register (84 FR 17454).
In the February 6, 2020 Federal Register (85 FR 7088), we published
a proposed rule that included updates to the risk adjustment models'
HCCs and a modification HHS-RADV error rate calculation methodology. We
published the 2021 Payment Notice final rule in the May 14, 2020
Federal Register (85 FR 29164).
In the June 2, 2020 Federal Register (85 FR 33595), we published a
proposed rule that proposed updates to various aspects of the HHS-RADV
methodologies and processes. We published a final rule titled, the
Amendments to the HHS-Operated Risk Adjustment Data Validation Under
the Patient Protection and Affordable Care Act's HHS-Operated Risk
Adjustment Program (2020 HHS-RADV Amendments Rule) in the December 1,
2020 Federal Register (85 FR 76979). That final rule revised the
failure rate grouping algorithm, finalized a sliding scale adjustment
in HHS-RADV error rate calculation, and a constraint on risk score
adjustments for low-side failure rate outliers. The final rule also
established a transition from the prospective application of HHS-RADV
adjustments to apply HHS-RADV results to risk scores from the same
benefit year as that being audited.
In the September 2, 2020 Federal Register (85 FR 54820), HHS issued
an interim final rule containing certain policy and regulatory
revisions in response to the COVID-19 public health emergency (PHE),
wherein we set forth risk adjustment reporting requirements for issuers
offering temporary premium credits in the 2020 benefit year (interim
final rule on COVID-19).
In the January 20, 2021 Federal Register (86 FR 6138), HHS issued a
final rule containing certain policy and regulatory revisions related
to the risk adjustment program (hereinafter referred to as ``part 1 of
the 2022 Payment Notice final rule''). In the May 5, 2021 Federal
Register (86 FR 24140), HHS issued another final rule containing policy
and regulatory revisions related to the risk adjustment program,
including approval of the request from Alabama to reduce risk
adjustment transfers by 50 percent in the individual and small group
markets for the 2022 benefit year (hereinafter referred to as ``part 2
of the 2022 Payment Notice final rule''). In addition, part 2 of the
2022 Payment Notice final rule established a revised schedule of
collections for HHS-RADV and updated the provisions regulating second
validation audit (SVA) and initial validation audit (IVA) entities.
2. Program Integrity
In the June 19, 2013 Federal Register (78 FR 37031), we published a
proposed rule that proposed certain program integrity standards related
to Exchanges and the premium stabilization programs (proposed Program
Integrity Rule). The provisions of that proposed rule were finalized in
two rules, the ``first Program Integrity Rule'' published in the August
30, 2013 Federal Register (78 FR 54069) and the ``second Program
Integrity Rule'' published in the October 30, 2013 Federal Register (78
FR 65045).
3. Market Rules
An interim final rule relating to the HIPAA health insurance
reforms was published in the April 8, 1997 Federal Register (62 FR
16894). A proposed rule relating to the 2014 health insurance market
rules was published in the November 26, 2012 Federal Register (77 FR
70584). A final rule implementing the health insurance market rules was
published in the February 27, 2013 Federal Register (78 FR 13406) (2014
Market Rules).
A proposed rule relating to Exchanges and Insurance Market
Standards for 2015 and beyond was published in the March 21, 2014
Federal Register (79 FR 15808) (2015 Market Standards Proposed Rule). A
final rule implementing the Exchange and Insurance Market Standards for
2015 and Beyond was published in the May 27, 2014 Federal Register (79
FR 30240) (2015 Market Standards Rule). The 2018 Payment Notice final
rule in the December 22, 2016 Federal Register (81 FR 94058) provided
additional guidance on guaranteed availability and guaranteed
renewability. In the Market Stabilization final rule that was published
in the April 18, 2017 Federal Register (82 FR 18346), we further
interpreted the guaranteed availability provision. In the 2019 Payment
Notice final rule in the April 17, 2018 Federal Register (83 FR 17058),
we clarified that certain exceptions to the special enrollment periods
only apply with respect to coverage offered outside of the Exchange in
the individual market.
[[Page 591]]
In the Nondiscrimination in Health and Human Education Programs or
Activities final rule on section 1557 of the ACA, published in the June
19, 2020 Federal Register (85 FR 37160), we removed nondiscrimination
protections on the basis of gender identity and sexual orientation from
the guaranteed availability regulation.
In part 2 of the 2022 Payment Notice final rule in the May 5, 2021
Federal Register (86 FR 24140), we made additional amendments to the
guaranteed availability regulation regarding special enrollment periods
and finalized new special enrollment periods related to untimely notice
of triggering events, cessation of employer contributions or government
subsidies to COBRA continuation coverage, and loss of APTC eligibility.
In the final rule Updating Payment Parameters, Section 1332 Waiver
Implementing Regulations, and Improving Health Insurance Markets for
2022 and Beyond published in the September 27, 2021 Federal Register
(86 FR 53412) (part 3 of the 2022 Payment Notice) by HHS and the
Department of the Treasury, HHS finalized additional amendments to the
guaranteed availability regulations regarding special enrollment
periods.
4. Exchanges
We published a request for comment relating to Exchanges in the
August 3, 2010 Federal Register (75 FR 45584). We issued initial
guidance to states on Exchanges on November 18, 2010. We proposed a
rule in the July 15, 2011 Federal Register (76 FR 41865) to implement
components of the Exchanges, and a rule in the August 17, 2011 Federal
Register (76 FR 51201) regarding Exchange functions in the individual
market and Small Business Health Options Program (SHOP), eligibility
determinations, and Exchange standards for employers. A final rule
implementing components of the Exchanges and setting forth standards
for eligibility for Exchanges, as well as network adequacy and ECP
certification standards, was published in the March 27, 2012 Federal
Register (77 FR 18309) (Exchange Establishment Rule).
In the 2014 Payment Notice and in the Amendments to the HHS Notice
of Benefit and Payment Parameters for 2014 interim final rule,
published in the March 11, 2013 Federal Register (78 FR 15541), we set
forth standards related to Exchange user fees. We established an
adjustment to the FFE user fee in the Coverage of Certain Preventive
Services under the Affordable Care Act final rule, published in the
July 2, 2013 Federal Register (78 FR 39869) (Preventive Services Rule).
In the 2016 Payment Notice, we also set forth the ECP certification
standard at Sec. 156.235, with revisions in the 2017 Payment Notice in
the March 8, 2016 Federal Register (81 FR 12203) and the 2018 Payment
Notice in the December 22, 2016 Federal Register (81 FR 94058).
In an interim final rule, published in the May 11, 2016 Federal
Register (81 FR 29146), we made amendments to the parameters of certain
special enrollment periods (2016 Interim Final Rule). We finalized
these in the 2018 Payment Notice final rule, published in the December
22, 2016 Federal Register (81 FR 94058).
In the April 18, 2017 Market Stabilization final rule Federal
Register (82 FR 18346), we amended standards relating to special
enrollment periods and QHP certification. In the 2019 Payment Notice
final rule, published in the April 17, 2018 Federal Register (83 FR
16930), we modified parameters around certain special enrollment
periods. In the April 25, 2019 Federal Register (84 FR 17454), the
final 2020 Payment Notice established a new special enrollment period.
In the February 6, 2020 Federal Register (85 FR 7088), we published
a proposed rule (proposal 2021 Payment Notice). We published the final
rule in the May 14, 2020 Federal Register (85 FR 29164) (2021 Payment
Notice).
In the December 4, 2020 Federal Register (85 FR 78572), we issued a
proposed rule containing certain policy and regulatory revisions
related to user fees (proposed 2022 Payment Notice). In the January 19,
2021 Federal Register (86 FR 6138), HHS issued a rule finalizing
certain of the provisions in the proposed 2022 Payment Notice (part 1
of the 2022 Payment Notice final rule). In the May 5, 2021 Federal
Register (86 FR 24140), HHS published a second final rule addressing
the remainder of the proposed provisions (part 2 of the 2022 Payment
Notice final rule). In the July 1, 2021 Federal Register (86 FR 35156),
HHS and the Department of the Treasury released a proposed rule
proposing to amend certain policies in part 1 of the 2022 Payment
Notice final rule, and finalized the rule in the September 27, 2021
Federal Register (86 FR 53412) (part 3 of the 2022 Payment Notice final
rule).
5. Essential Health Benefits
On December 16, 2011, HHS released a bulletin that outlined an
intended regulatory approach for defining EHB, including a benchmark-
based framework.\14\ A proposed rule relating to EHBs was published in
the November 26, 2012 Federal Register (77 FR 70643). We established
requirements relating to EHBs in the Standards Related to Essential
Health Benefits, Actuarial Value, and Accreditation Final Rule, which
was published in the February 25, 2013 Federal Register (78 FR 12833)
(EHB Rule). In the 2019 Payment Notice, published in the April 17, 2018
Federal Register (83 FR 16930), we added Sec. 156.111 to provide
states with additional options from which to select an EHB-benchmark
plan for PYs 2020 and beyond.
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\14\ ``Essential Health Benefits Bulletin.'' December 16, 2011.
Available at https://www.cms.gov/CCIIO/Resources/Files/Downloads/essential_health_benefits_bulletin.pdf.
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6. Medical Loss Ratio (MLR)
We published a request for comment on section 2718 of the PHS Act
in the April 14, 2010 Federal Register (75 FR 19297), and published an
interim final rule with a 60-day comment period relating to the MLR
program on December 1, 2010 (75 FR 74863). A final rule with a 30-day
comment period was published in the December 7, 2011 Federal Register
(76 FR 76573). An interim final rule with a 60-day comment period was
published in the December 7, 2011 Federal Register (76 FR 76595). A
final rule was published in the Federal Register on May 16, 2012 (77 FR
28790). The MLR program requirements were amended in final rules
published in the March 11, 2014 Federal Register (79 FR 13743), the May
27, 2014 Federal Register (79 FR 30339), the February 27, 2015 Federal
Register (80 FR 10749), the March 8, 2016 Federal Register (81 FR
12203), the December 22, 2016 Federal Register (81 FR 94183), the April
17, 2018 Federal Register (83 FR 16930), the May 14, 2020 Federal
Register (85 FR 29164), and the May 5, 2021 Federal Register (86 FR
24140), and an interim final rule that was published in the September
2, 2020 Federal Register (85 FR 54820).
7. Quality Improvement Strategy
We promulgated regulations in 45 CFR 155.200(d) to direct Exchanges
to evaluate quality improvement strategies, and 45 CFR 156.200(b) that
direct QHP issuers to implement and report on a quality improvement
strategy or strategies consistent with section 1311(g) standards as a
QHP certification criteria for participation in an Exchange. In the
2016 Payment Notice, published in the February 27, 2015 Federal
Register (80 FR 10749), we finalized
[[Page 592]]
regulations at Sec. 155.1130 to establish standards and the associated
timeframe for QHP issuers to submit the necessary information to
implement QIS standards for QHPs offered through an Exchange.
8. Nondiscrimination
Section 1311(b) and section 1321(b) of the ACA provide that each
state has the opportunity to establish an Exchange. In the July 15,
2011 Federal Register (76 FR 41866), HHS published the ``Patient
Protection and Affordable Care Act; Establishment of Exchanges and
Qualified Health Plans'' proposed rule to implement section 1311(b) and
section 1321(b) of the ACA. In the March 27, 2012 Federal Register (77
FR 18310), HHS published the ``Patient Protection and Affordable Care
Act; Establishment of Exchanges and Qualified Health Plans; Exchange
Standards for Employers'' final rule and interim final rule
(hereinafter referred to as the ``Exchange Standards final rule''),
which included nondiscrimination protections.
Section 1302 of the ACA provides for the establishment of an EHB
package that includes coverage of EHB and actuarial value requirements.
In the November 26, 2012 Federal Register (77 FR 70644), HHS published
the ``Patient Protections and Affordable Care Act; Standards Related to
Essential Health Benefits, Actuarial Value, and Accreditation''
proposed rule to implement section 1302 of the ACA. In the February 25,
2013 Federal Register (78 FR 12834), HHS published the ``Patient
Protections and Affordable Care Act; Standards Related to Essential
Health Benefits, Actuarial Value, and Accreditation'' final rule, which
included nondiscrimination protections.
Sections 2701, 2702, and 2703 of the PHS Act and Section 1312(c) of
the ACA provide protections to individuals and employers in obtaining
health insurance coverage. In the November 26, 2012 Federal Register
(77 FR 70584), HHS published the ``Patient Protection and Affordable
Care Act; Health Insurance Market Rules; Rate Review'' proposed rule to
implement sections 2701, 2702, and 2703 of the PHS Act and section
1312(c) of the ACA. In the February 27, 2013 Federal Register (78 FR
13406), HHS published the ``Patient Protections and Affordable Care
Act; Health Insurance Market Rules; Rate Review'' final rule, which
included nondiscrimination protections.
In the HHS Notice of Benefit and Payment Parameters for 2017
proposed rule, published in the December 2, 2015 Federal Register (80
FR 75488), HHS proposed policies for nondiscrimination protections into
the relevant notice of benefit and payment parameters. In the March 8,
2016 Federal Register (81 FR 12204), HHS published the HHS Notice of
Benefit and Payment Parameters for 2017 final rule, which included
nondiscrimination protections.
In the Nondiscrimination in Health and Human Education Programs or
Activities final rule on section 1557 of the ACA, published in the June
19, 2020 Federal Register (85 FR 37160), HHS removed nondiscrimination
protections on the basis of gender identity and sexual orientation from
various CMS nondiscrimination regulations. In the HHS Notice of
Interpretation and Enforcement of Section 1557 of the Affordable Care
Act and Title IX of the Education Amendments of 1972, published in the
May 25, 2021 Federal Register (86 FR 27984), HHS informed the public
that HHS will interpret and enforce section 1557's and Title IX's
prohibition on discrimination on the basis of sex to include
discrimination based on sexual orientation and gender identity.
B. Stakeholder Consultation and Input
HHS has consulted with stakeholders on policies related to the PHS
Act federal market reform requirements, the operation of Exchanges and
the risk adjustment (including HHS-RADV) program. We have held a number
of meetings with consumers, providers, employers, health plans,
advocacy groups and the actuarial community to gather public input. We
have solicited input from state representatives on numerous topics,
particularly EHBs, state mandates, and risk adjustment. We consulted
with stakeholders through regular meetings with the National
Association of Insurance Commissioners (NAIC), regular contact with
states through the Exchange Blueprint approval and general Exchange
oversight processes, and meetings with Tribal leaders and
representatives, health insurance issuers, trade groups, consumer
advocates, employers, and other interested parties. We considered all
public input we received as we developed the policies in this proposed
rule.
C. Structure of Proposed Rule
The regulations outlined in this proposed rule would be codified in
45 CFR parts 144, 147, 153, 155, 156 and 158.
The proposed changes to 45 CFR part 144 would remove superfluous
language from the definition of large group market.
The proposed changes to 45 CFR part 147 would prohibit issuers from
discriminating against individuals in issuer marketing practices and
benefit designs based on sexual orientation and gender identity. We
also propose to reinterpret the guaranteed availability requirements in
Sec. 147.104 such that issuers could not refuse to effectuate new
coverage based on failure of an individual or employer to pay premiums
owed for prior coverage.
The proposed changes to 45 CFR part 153 would recalibrate the 2023
benefit year risk adjustment models using the 2017, 2018, and 2019
enrollee-level External Data Gathering Environment (EDGE) data. We also
propose to update the adult and child risk adjustment models for 2023
and beyond to better predict plan liability for certain subpopulations.
We propose to update the adult risk adjustment models by removing the
current severity illness factors and replacing the current enrollment
duration factors with enrollment duration factors contingent on the
enrollee having at least one HCC. In addition, we propose to update the
adult and child risk adjustment models by adding a two-stage weighted
approach to model recalibrations and an interacted HCC count model
specification for 2023 and beyond. We propose to continue applying a
market pricing adjustment to the plan liability associated with
Hepatitis C drugs in the risk adjustment models, consistent with the
approach adopted beginning with the 2020 models. We discuss removing
the mapping of hydroxychloroquine sulfate to RXC 09 (Immune
Suppressants and Immunomodulators) in the 2018 and 2019 benefit year
enrollee-level EDGE data used for the annual recalibration of the HHS
risk adjustment models. We also propose for the 2024 benefit year and
beyond to recalibrate the models using the final, fourth quarter (Q4)
RXC mapping document that was applicable for each benefit year of data
that is included in the current year's model recalibration. We propose
using this approach for recalibration of the 2023 adult risk adjustment
models with the exception of the 2017 enrollee-level EDGE data year,
for which we propose to use the most recent RXC mapping document that
was available when we first processed the 2017 enrollee-level EDGE data
(that is, Q2 2018).We also propose to collect and extract five new data
elements including ZIP code, race, ethnicity, ICHRA indicator, and a
subsidy indicator as part of the required risk adjustment data that
issuers must make accessible to HHS in states where HHS is operating
the risk adjustment program. We also propose to extract three new data
elements issuers already
[[Page 593]]
provide to HHS as part of the required risk adjustment data submissions
(plan ID, rating area, and subscriber indicator) and to expand the
permitted uses of the risk adjustment data and reports. Additionally,
we propose an amendment to Sec. 153.730 to address situations when
April 30 does not fall on a business day and to provide that when this
occurs, the deadline for issuers to submit the required risk adjustment
data in states where HHS operates the program would be the next
applicable business day.
The proposals in part 153 also relate to risk adjustment state
flexibility requests. We propose to repeal the ability of states to
request a reduction in risk adjustment transfers calculated by HHS
under the state payment transfer formula starting with the 2024 benefit
year, while proposing to create an exception for any state that has
requested a reduction in prior benefit years. In addition, we solicit
comments on the requests from Alabama to reduce risk adjustment state
transfers for the 2023 benefit year in the individual (including the
catastrophic and non-catastrophic risk pools) and small group markets.
In part 153 we also propose the risk adjustment user fee for the
2023 benefit year and modifications to the error estimation methodology
applied in HHS-RADV. We propose updating the HHS-RADV error estimation
process to extend the application of Super HCCs beyond the sorting step
that assigns HCCs to failure rate groups to also apply throughout the
HHS-RADV error rate calculation processes and to specify that Super
HCCs will be defined separately according to the model (infant, child,
adult) to which an enrollee is subject. We also propose to constrain to
zero any failure rate group outlier negative failure rate, regardless
of whether the outlier issuer has a negative or positive error rate.
Finally, we propose that whenever HHS recoups high-cost risk pool funds
as a result of audits of risk adjustment covered plans, an actionable
discrepancy, or a successful administrative appeal, the recouped high-
cost risk pool funds will be used to reduce high-cost risk pool charges
for that national high-cost risk pool beginning for the next benefit
year for which a high cost risk pool payment has not already been
calculated.
In addition, the proposals regarding part 153 also relate to MLR
reporting requirements and clarify how issuers should report certain
ACA program amounts that could be subject to reconsideration for MLR
reporting purposes. We propose to separately address and reference HHS-
RADV adjustments to make clear that HHS expects issuers to report HHS-
RADV adjustments as part of their MLR reports in the same manner as
they report risk adjustment payment and charge amounts.
The proposed changes to 45 CFR part 155 would allow Exchanges to
implement a verification process for enrollment in or eligibility for
an eligible employer sponsored plan based on the Exchange's assessment
of risk for inappropriate payments of APTC/CSR. In part 155 we also
propose to require all Exchanges to prorate when administering APTC for
enrollees enrolled in a particular policy for less than the full
coverage month, including when the enrollee is enrolled in multiple
policies within a month, each lasting less than the full coverage
month. We also propose new requirements in part 155 related to the QHP
comparative information and standardized disclaimer required to be
displayed on web-broker non-Exchange websites, a prohibition on
displaying QHP advertisements or otherwise providing favored or
preferred placement in the display of QHPs on web-broker non-Exchange
websites based on compensation agents, brokers, or web-brokers receive
from QHP issuers, and a requirement regarding the prominent display of
a clear explanation of the rationale for explicit QHP recommendations
and the methodology for the default display of QHPs on web-broker non-
Exchange websites to better inform and protect consumers using such
websites. We also propose changes to part 155, to clarify the FFE
standards of conduct and what it means for agents, brokers, and web-
brokers to provide the Exchange with correct information under section
1411(b) of the ACA, including ensuring that accurate consumer
information is being entered on Exchange applications. Finally, we
propose changes to part 155 to set forth prohibited agent, broker, and
web-broker business practices commonly observed by HHS and to create
enforceable standards under which HHS may take enforcement action
against agents, brokers, and web-brokers when these prohibited business
practices are discovered.
In 45 CFR part 156, as we do every year in the HHS notice of
benefit and payment parameters, we propose to update the user fee rates
for the 2023 benefit year for all issuers participating on the
Exchanges using the Federal platform. We note that we intend to publish
the 2023 premium adjustment percentage index and related payment
parameters in guidance as finalized in part 2 of the 2022 Payment
Notice. The proposed changes to part 156 also include technical
amendments to Sec. 156.50 to conform the user fee regulations with the
repeal of Exchange Direct Enrollment (DE) option finalized in part 3 of
the 2022 Payment Notice.\15\ We are proposing changes to Sec. 156.430
to clarify that the CSR data submission process is mandatory only for
those issuers that receive CSR payments from HHS for any part of the
benefit year as a result of HHS possessing a valid appropriation to
make CSR payments, and voluntary for other issuers.
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\15\ 86 FR 53412.
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In part 156, we also propose an evergreen deadline for EHB-
benchmark plan applications by states, as well as proposing to remove
the ability for states to permit issuers to substitute benefits between
EHB categories, proposing to change de minimis thresholds for the AV of
plans subject to the AV requirements, as well as narrower de minimis
thresholds for individual market silver QHPs and income-based CSR plan
variations; and proposing to remove the annual reporting requirement on
states to report state-required benefits in addition to the EHB to HHS.
In part 156, we also propose to require issuers of QHPs in FFEs and
SBE-FPs to offer through the Exchange standardized QHP options
beginning in PY 2023. We also propose to update the QIS standards in
part 156 to require QHP issuers to address health and health care
disparities as a specific topic area within their QIS beginning with PY
2023.
The proposed changes to part 158 would clarify that only those
provider incentives and bonuses that are tied to clearly defined,
objectively measurable, and well-documented clinical or quality
improvement standards that apply to providers may be included in
incurred claims for MLR reporting and rebate calculation purposes. The
proposed changes to part 158 would also specify that only expenses
directly related to activities that improve health care quality may be
included as QIA expenses for MLR reporting and rebate calculation
purposes. In addition, the proposed changes to part 158 would make a
technical amendment to Sec. 158.170(b) to correct an oversight and
remove the reference to the percentage of premium QIA reporting option
described in Sec. 158.221(b)(8), a provision that was vacated by the
United States District Court for the District of Maryland in City of
Columbus, et al. v.
[[Page 594]]
Cochran,\16\ and thus deleted in part 2 of the 2022 Payment Notice
final rule.
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\16\ 523 F. Supp. 3d 731 (D. Md. 2021).
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III. Provisions of the Proposed HHS Notice of Benefit and Payment
Parameters for 2023
A. Part 144--Requirements Relating to Health Insurance Coverage
1. Definitions (Sec. 144.103)
We propose to remove superfluous language from the definition of
large group market. The definition currently provides that ``Large
group market'' means the health insurance market under which
individuals obtain health insurance coverage (directly or through any
arrangement) on behalf of themselves (and their dependents) through a
group health plan maintained by a large employer, unless otherwise
provided under State law. We propose to amend the definition by
deleting the phrase ``unless otherwise provided under State law.'' The
phrase has no meaning or application, and does not appear in the
statutory definition of the term in section 2791(e)(3) of the PHS Act.
That phrase was initially included in the PHS Act regulatory
definitions of large group market, large employer, and small employer
adopted by HHS under HIPAA.\17\ However, in final rules published on
October 30, 2013 (78 FR 65045), we amended the definitions of large
employer and small employer to make them consistent with PHS Act
section 2791(e), as amended by the ACA, and in so doing, removed that
phrase from the definitions. At that time, we inadvertently neglected
to delete the phrase from the regulatory definition of large group
market, and we now propose to do so, in order to align these
definitions and make the regulatory definition for large group market
consistent with the definition under the ACA.
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\17\ 62 FR 16894 (April 8, 1997) and 69 FR 78720 (Dec. 30,
2004).
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B. Part 147--Health Insurance Reform Requirements for the Group and
Individual Health Insurance Markets
1. Guaranteed Availability of Coverage (Sec. 147.104)
a. Past-Due Premiums
We propose to re-interpret the guaranteed availability requirement
at section 2702 of the PHS Act and its implementing regulation at Sec.
147.104 to require issuers to accept individuals and employers who
apply for coverage, even where the individual or employer owes past-due
premiums for coverage from the same issuer or another issuer in the
same controlled group. On January 28, 2021, President Biden issued
Executive Order 14009, ``Strengthening Medicaid and the Affordable Care
Act'' (E.O. 14009).\18\ Section 3 of E.O. 14009 directs HHS, and the
heads of all other executive departments and agencies with authorities
and responsibilities related to Medicaid and the ACA, to review all
existing regulations, orders, guidance documents, policies, and any
other similar agency actions to determine whether they are inconsistent
with policy priorities described in Section 1 of E.O. 14009, to include
protecting and strengthening the ACA and making high-quality health
care accessible and affordable for all individuals. Consistent with
E.O. 14009, specifically section 3(iv), this proposal intends to remove
an unnecessary barrier to individuals and families attempting to enroll
into health coverage in the individual market.
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\18\ E.O. 14009; 86 FR 7793 (Feb. 2, 2021).
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Specifically, we propose to redesignate Sec. 147.104(i) as Sec.
147.104(j) and add a new Sec. 147.104(i) to specify that a health
insurance issuer that denies coverage to an individual or employer due
to the individual's or employer's failure to pay premium owed under a
prior policy, certificate, or contract of insurance, including by
attributing payment of premium for a new policy, certificate, or
contract of insurance to the prior policy, certificate, or contract of
insurance, violates Sec. 147.104(a). The guaranteed availability
provisions require health insurance issuers offering non-grandfathered
coverage in the individual or group market to accept every individual
and employer in the state that applies for such coverage unless an
exception applies. Individuals and employers typically are required to
pay the first month's premium to effectuate coverage. Under the current
interpretation of the guaranteed availability requirement stated in the
Market Stabilization final rule, to the extent permitted by applicable
state law, an issuer does not violate the guaranteed availability
requirements under Sec. 147.104 where the issuer attributes a premium
payment made for new coverage to any past-due premiums owed for
coverage from the same issuer or another issuer in the same controlled
group within the prior 12-month period before effectuating enrollment
in the new coverage. This policy addressed concerns that individuals
might take unfair advantage of the rules regarding grace periods.\19\
However, in part 3 of the 2022 Payment Notice proposed rule, we stated
our intention to reassess this interpretation to analyze whether this
policy presents unnecessary barriers to accessing health coverage.\20\
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\19\ QHP issuers are required, under Sec. 156.270, to provide a
grace period of 3 consecutive months for an enrollee, who, when
failing to timely pay premiums, is receiving APTC. If the enrollee
exhausts the grace period without paying all outstanding premiums,
subject to a premium payment threshold implemented under Sec.
155.400(g), then the QHP issuer must terminate the enrollee's
enrollment back to the last day of the first month of the 3-month
grace period. As a result, an individual receiving APTC whose
coverage is terminated after the exhaustion of a grace period would
owe at most 1 month of premiums, net of any APTC paid on their
behalf to the issuer; however, an individual who attempts to enroll
in new coverage while in a grace period, and whose coverage has not
yet been terminated, could owe up to 3 months of premium, net of any
APTC paid on their behalf to the issuer.
\20\ 86 FR 35156, 36071.
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After reevaluating our interpretation of the guaranteed
availability requirement, we propose reinstating our previous
interpretation of the guaranteed availability rules with respect to
non-payment of premiums.\21\ Under this interpretation, an issuer may
not apply any premium payment made for new coverage in the same or a
different plan or product to any outstanding debt owed from any
previous coverage and then refuse to effectuate the new enrollment
based on failure to pay premiums. Thus, the guaranteed availability
requirement would prohibit issuers from refusing to effectuate new
coverage due to failure to pay outstanding premium debt from the
previous year.
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\21\ Federally-facilitated Marketplace (FFM) and Federally-
facilitated Small Business Health Options Program Enrollment Manual,
Section 6.3 Terminations for Non-Payment of Premiums, https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/ENR_FFMSHOP_Manual_080916.pdf (describing operational requirements
effective as of July 19, 2016, which were superseded by subsequent
publications).
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Based on HHS' experience since we codified the currently-effective
interpretation of guaranteed availability, we believe the current
policy, has the unintended consequence of creating barriers to health
coverage that disproportionately affect low-income individuals, and is
therefore inconsistent with the intent of the guaranteed availability
statutory requirements. The current policy heightens the risk of
economic hardships for low-income individuals enrolled in health
insurance coverage with APTC. Individuals stop paying premiums (and
lose coverage due to nonpayment of premiums) for a variety of reasons
throughout the year. For example, commenters to the Market
Stabilization proposed rule stated that individuals who are victims of
crime, or those grappling with domestic violence,
[[Page 595]]
medical emergencies, incarceration, or other urgent circumstances are
often forced to make difficult financial decisions that may lead to
failure to pay their health insurance premiums. Even for some middle-
income families, the high cost of health care for multiple family
members with chronic health conditions may result in non-payment of
premiums.\22\ Requiring such individuals to pay back past-due premium
plus a binder payment prior to enrollment may present an insurmountable
barrier leading to gaps in coverage. For this reason, HHS is of the
view that the current interpretation of the guaranteed availability
requirement creates unnecessary barriers to accessing health coverage.
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\22\ John Tozzi. (March 2018). ``Why Some Americans Are Risking
It and Skipping Health Insurance.'' Bloomberg News. Retrieved from
https://www.bloomberg.com/news/features/2018-03-26/why-some-americans-are-risking-it-and-skipping-health-insurance.
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HHS is also concerned that the barriers created by the current
interpretation of guaranteed availability disproportionately affect
low-income enrollees for whom APTC is paid. Under federal law governing
grace periods for enrollees for whom APTC is paid, QHP issuers must
provide a 3-month grace period before they are allowed to terminate an
enrollee's coverage for non-payment of premiums and must continue to
provide coverage during the first month of the grace period. As a
result, those enrollees who are unable to satisfy outstanding premium
payments by the end of the 3-month grace period generally may owe at
least one month of past due premium after their coverage is terminated.
In contrast, grace period rules for individuals who are not eligible
for APTC are governed by state law. Many state laws allow for
termination back to the end of the period for which an enrollee paid
premium, in which case an enrollee without APTC whose coverage is
terminated for nonpayment would not owe past-due premium when they
attempt to enroll in coverage during a subsequent open enrollment or
special enrollment period. Enrollees for whom APTC is paid generally
may have household incomes as low as 100 percent of the federal poverty
level (FPL) (which, for the 2021 benefit year, is $12,760 for a single
person household).\23\ Thus, premium payment policies that require
payment of past-due premiums prior to effectuation of new coverage are
likely to disproportionately affect low-income enrollees with APTC, the
individuals who may be least able to pay all outstanding premium debt
among those seeking coverage in the individual market.
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\23\ See 2021 Poverty Guidelines for the 48 Contiguous States
and the District of Columbia, available at https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references/2020-poverty-guidelines.
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Conditioning health insurance enrollment on the payment of past-due
premiums could disincentivize health insurance enrollment altogether,
reducing the rate of enrollment for low-income individuals. The
economic burden associated with being required to pay past-due premiums
prior to enrolling in new coverage may prevent low-income individuals
from enrolling in coverage and affect the demographics of the risk
pool. Various studies have found that low-income families often
struggle to balance out-of-pocket health care costs alongside rent or
mortgage payments, and other necessary living expenses.\24\ Maintaining
the current interpretation of the guaranteed availability rules would
uphold barriers to health insurance coverage for low-income
individuals, who face a greater risk of poorer health outcomes.\25\
Reverting to the previous interpretation of the guaranteed availability
rules would ensure individuals who stand to benefit the most from
health insurance coverage can enroll in coverage, and would promote
more equitable access to health insurance coverage. In addition, the
public health and economic crises caused by the COVID-19 pandemic
exacerbated the hardships facing low-income individuals and families.
The resulting financial and health insecurity caused by the pandemic
underscores the critical role that access to continuous health coverage
will continue to play during the ongoing and often unpredictable
challenges of the pandemic and beyond. Returning to the previous
interpretation of the guaranteed availability rule would remove a
barrier to accessing health coverage that compounds the economic
challenges from the COVID-19 crisis.
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\24\ Tim Thomas, Ph.D.; Jose Hernandez, Ph.D.; et al. (2019).
The Evictions Study. The University of California Berkeley and the
University of Washington. Retrieved from https://evictions.study/.
\25\ P.J. Cunningham; T.L. Green; R.T. Braun. (February 2018).
Income Disparities in the Prevalence, Severity, and Costs of Co-
Occurring Chronic and Behavioral Health Conditions. Medical Care.
Retrieved from https://www.commonwealthfund.org/publications/journal-article/2018/feb/income-disparities-prevalence-severity-and-costs-co-occurring.
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In the Market Stabilization rule, we noted concern that enrollees
with APTC may take advantage of guaranteed availability by declining to
make premium payments for coverage at the end of a benefit year without
losing coverage. Although this remains possible, we are of the view
that the disparate negative impact on low-income populations outweighs
the possible deterrent effect on individuals who may try taking
advantage of the guaranteed availability rules. We seek comment
regarding the frequency of any potential gaming behavior, as well as
information on the primary diagnoses and services that may be involved
in suspected gaming situations so that we may better assess any
contributing causes of such non-payment. For example, non-payment may
not be the result of gaming, but could be indicative of contextual
challenges individuals face in satisfying payment obligations. We are
particularly interested in comments from issuers that have not adopted
a premium payment policy that requires payment of past-due premiums
prior to effectuating enrollment. In addition, we note that issuers are
generally not permitted to forgive past-due premium debt, and can
pursue other mechanisms to collect past-due premiums. We believe this
mitigates the risk that some enrollees may take advantage of the
guaranteed availability rules.
We seek comment on this proposal.
b. Nondiscrimination Based on Sexual Orientation and Gender Identity
We propose to amend 45 CFR 147.104(e) such that its
nondiscrimination protections would explicitly prohibit discrimination
based on sexual orientation and gender identity. HHS previously
codified such nondiscrimination protections at Sec. 147.104(e), but
amendments made in 2020 to Sec. 147.104(e) removed any reference to
sexual orientation and gender identity. If finalized, this proposal
would revert Sec. 147.104(e) to the pre-2020 nondiscrimination
protections.
Section 147.104(e) states that a health insurance issuer and its
officials, employees, agents, and representatives must not employ
marketing practices or benefit designs that would have the effect of
discouraging the enrollment of individuals with significant health
needs in health insurance coverage or discriminate based on race,
color, national origin, present or predicted disability, age, sex,
expected length of life, degree of medical dependency, quality of life,
or other health conditions. Previously, in the 2014 Market Rules, we
finalized Sec. 147.104(e) to also prohibit discrimination based on
sexual orientation and gender
[[Page 596]]
identity.\26\ However, in the 2020 final rule that revised regulations
implementing section 1557 of the ACA, HHS also revised certain CMS
regulations, including those at Sec. 147.104(e), by removing sexual
orientation and gender identity as bases of discrimination subject to
the CMS regulations' nondiscrimination protections.\27\ The 2020
section 1557 final rule is the subject of ongoing litigation.\28\
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\26\ 78 FR 13406 (February 27, 2013).
\27\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020
section 1557 final rule revised the following CMS regulations: 45
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
\28\ The 2020 section 1557 final rule is the subject of several
lawsuits and court orders. For more information, see https://www.hhs.gov/civil-rights/for-individuals/section-1557/.
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Pursuant to section 1311(c)(1)(A) of the ACA, the HHS Secretary was
required to establish by regulation criteria for certification that
require QHP issuers to meet marketing requirements and not employ
marketing practices or benefit designs that will have the effect of
discouraging the enrollment of individuals with significant health
needs in QHPs. Under the authority of section 1321(a) of the ACA, which
provides the HHS Secretary broad rulemaking authority with respect to
the establishment and operation of Exchanges and the offering of QHPs
through such Exchanges, in the 2012 Exchange Standards final rule, CMS
codified a regulation implementing this requirement at Sec. 156.225.
Under the general rulemaking authority in section 2792 of the PHS Act,
which provides the HHS Secretary broad rulemaking authority to
promulgate regulations as may be necessary or appropriate to carry out
the provisions of title XXVII of the PHS Act, the 2014 Market Rules
adopted a similar standard in Sec. 147.104(e), applying this
requirement to the group and individual health insurance markets.
Furthermore, in order to ensure consistency against employing
discriminatory marketing practices and benefit designs, HHS finalized
Sec. 147.104(e) to align with other prohibitions on discrimination
that HHS had already codified at that time with respect to EHB in Sec.
156.125, with respect to standards applicable to QHPs under Sec.
156.200(e) that included protections against discrimination on the
basis of sexual orientation and gender identity, and with respect to
marketing standards in Sec. 156.225. The 2014 Market Rules further
clarified that discriminatory marketing practices or benefit designs
represent a failure by issuers to comply with the guaranteed
availability requirements in PHS Act section 2702, as such practices or
designs can have the effect of discouraging or preventing the
enrollment of individuals in health insurance coverage.
In the 2020 section 1557 final rule, HHS revised the section 1557
implementing regulation. Among other things, the rule removed the
definition of ``on the basis of sex,'' which included gender identity,
and instead purported to rely upon the ``plain meaning'' of the word
``sex'' in the underlying Title IX regulation.\29\ However, as HHS
noted in the 2020 section 1557 final rule, CMS possesses statutory
authority independent of section 1557 of the ACA to prohibit
discrimination in the group and individual markets.\30\
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\29\ 85 FR 37160, 37166 (June 19, 2020). The 2016 and 2020
section 1557 final rules are the subject of several lawsuits and
court orders. For more information, see https://www.hhs.gov/civil-rights/for-individuals/section-1557/, https://www.hhs.gov/civil-rights/for-individuals/section-1557/.
\30\ 85 FR 37160, 37219, 37218-21 (June 19, 2020).
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Following public posting of the 2020 section 1557 final rule on the
agency's website, the Supreme Court held in Bostock v. Clayton County,
140 S. Ct. 1731 (2020), that discrimination on the basis of sex under
Title VII of the Civil Rights Act of 1964 includes discrimination on
the basis of sexual orientation and gender identity. On January 20,
2021, the President signed Executive Order 13988 stating that it is the
Administration's policy to prevent and combat discrimination on the
basis of gender identity and sexual orientation, and that under
Bostock's reasoning, laws that prohibit sex discrimination also
prohibit discrimination on the basis of gender identity and sexual
orientation, so long as the laws do not contain sufficient indications
to the contrary.\31\ The Executive Order (E.O.) also instructed all
agency heads, including the HHS Secretary, to review all existing
regulations, guidance documents, and other agency actions to determine
whether they are consistent with the aforementioned policy, and to
consider whether to suspend, revise, or rescind any agency actions that
are inconsistent with it. The Department of Justice (DOJ) issued a
memorandum on March 26, 2021 that determined the court's reasoning in
Bostock applies to Title IX and thus that Title IX's prohibition on
discrimination on the basis of sex includes discrimination on the basis
of gender identity and sexual orientation.\32\ Following the E.O. and
DOJ's memorandum, HHS released on May 10, 2021 a Notice that HHS will
interpret and enforce section 1557's and Title IX's prohibition on
discrimination on the basis of sex to include: (1) Discrimination on
the basis of sexual orientation; and (2) discrimination on the basis of
gender identity.\33\
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\31\ Executive Order 13988 on Preventing and Combating
Discrimination on the Basis of Gender Identity or Sexual
Orientation, 86 FR 7023 (Jan. 20, 2021).
\32\ U.S. Dep't of Justice, Memorandum on Application of Bostock
v. Clayton County to Title IX of the Education Amendments of 1972
(Mar. 26, 2021), https://www.justice.gov/crt/page/file/1383026/download. On June 16, 2021, the Department of Education's Office for
Civil Rights issued a similar Notice explaining that it too will
enforce Title IX's prohibition on discrimination on the basis of sex
to include: (1) Discrimination based on sexual orientation; and (2)
discrimination based on gender identity (available at https://www2.ed.gov/about/offices/list/ocr/docs/202106-titleix-noi.pdf).
\33\ 86 FR 27984.
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Likewise, CMS is not relying on authority from section 1557 of the
ACA for the proposal at Sec. 147.104(e) or the parallel proposals to
nondiscrimination regulations at Sec. Sec. 155.120(c), 155.220(j),
156.125(b), 156.200(e), and 156.1230(b). We will further elaborate in
the respective preambles to Sec. Sec. 147.104(e), 155.120(c),
155.220(j), 156.125(b), 156.200(e), and 156.1230(b) the specific ACA
authority CMS is relying on to prohibit discrimination in the group and
individual markets. CMS proposes to exercise the same authority as it
exercised in the 2014 Market Rules to amend Sec. 147.104(e) to again
prohibit a health insurance issuer and its officials, employees,
agents, and representatives from discriminating in its marketing
practices or benefit designs on the basis of sexual orientation and
gender identity. Specifically, CMS proposes to again rely on section
2702 of the PHS Act, as well as section 2792 of the PHS Act, which
provides the HHS Secretary broad rulemaking authority to promulgate
regulations as may be necessary or appropriate to carry out the
provisions of title XXVII of the PHS Act. These are the same
authorities CMS relies upon for implementation of existing
nondiscrimination protections at Sec. 147.104(e). Utilizing these same
authorities to again prohibit discrimination based on sexual
orientation and gender identity would be consistent with the authority
CMS relies upon for those existing protections at Sec. 147.104(e) that
currently prohibit discrimination on the basis of race, color, national
origin, present or predicted disability, age, sex, expected length of
life, degree of medical dependency, quality of life, or other health
conditions.
People who identify as part of the lesbian, gay, bisexual,
transgender, and
[[Page 597]]
queer (LGBTQI+) community face pervasive health and health care
disparities, and are at higher risk for many concomitant conditions,
including substance use and \34\ mental health disorders, sexually
transmitted infections,\35\ HIV,\36\ cancer, cardiovascular disease,
and obesity.\37\ Overall, LGBTQI+ people report being in poorer health
than non-LGBTQI+ individuals. LGBTQI+ people of all genders are more
likely to become disabled at a younger age than heterosexual
individuals.\38\ In addition to disparities in health outcomes, LGBTQI+
people face barriers to obtaining appropriate health care and
transgender people who can access insurance may nonetheless be denied
coverage for needed services. For example, nearly half of transgender
respondents in one survey said their health insurance company denied
them gender affirming surgery,\39\ and a similar proportion reported
that they were denied coverage for hormone therapy.\40\ Beyond health
coverage issues, LGBTQI+ people may struggle to access care because of
cost barriers. LGBTQI+ people are also more likely than others to
report postponing or forgoing health care due to costs, and costs were
an even greater obstacle for younger LGBTQI+ people and those who are
transgender--especially transgender people of color.\41\
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\34\ Hilary Daniel et al, Annals of Internal Med. Position
Papers, Lesbian, Gay, Bisexual, and Transgender Health Disparities:
Executive Summary of a Policy Position Paper From the American
College of Physicians (July 21, 2105), https://www.acpjournals.org/doi/full/10.7326/M14-2482?journalCode=aim.
\35\ Hilary Daniel et al, Annals of Internal Med. Position
Papers, Lesbian, Gay, Bisexual, and Transgender Health Disparities:
Executive Summary of a Policy Position Paper From the American
College of Physicians (July 21, 2105), https://www.acpjournals.org/doi/full/10.7326/M14-2482?journalCode=aim.
\36\ U.S. Dep't of Health & Human Servs., Ctrs. for Disease
Control and Prevention, HIV Surveillance Report, 2019; Vol. 32 (May
2021), https://www.cdc.gov/hiv/pdf/library/reports/surveillance/cdc-hiv-surveillance-report-2018-updated-vol-32.pdf.
\37\ See, for example, Lesbian, Gay, Bisexual, and Transgender
Health, Healthy People 2020, https://www.healthypeople.gov/2020/
topics-objectives/topic/lesbian-gay-bisexual-and-transgender-
health#:~:text=Research%20suggests%20that%20LGBT%20individuals,%2C2%2
C%203%20and%20suicide; Hafeez, Hudaisa et al. ``Healthcare
Disparities Among Lesbian, Gay, Bisexual, and Transgender Youth: A
Literature Review.'' Cureus vol. 9,4 e1184. 20 Apr. 2017,
doi:10.7759/cureus.1184 (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5478215/); Fredriksen-Goldsen KI, Kim H-J, Barkan SE, Muraco A
and Hoy-Ellis CP (2013) Health disparities among lesbian, gay, and
bisexual older adults: Results from a population-based study.
American Journal of Public Health 103, 1802-1809; Billy A. Caceres
et al. ``A Systematic Review of Cardiovascular Disease in Sexual
Minorities'', American Journal of Public Health 107, no. 4 (April 1,
2017): pp. e13-e21.
\38\ Hilary Daniel et al, Annals of Internal Med. Position
Papers, Lesbian, Gay, Bisexual, and Transgender Health Disparities:
Executive Summary of a Policy Position Paper From the American
College of Physicians (July 21, 2105), https://www.acpjournals.org/doi/full/10.7326/M14-2482?journalCode=aim.
\39\ For purposes of this preamble, the term ``gender affirming
care'' means gender affirming care for transgender individuals. This
may also be referred to as ``transition related care.''
\40\ Sharita Gruberg et al, Center for American Progress, The
State of the LGBTQ Community in 2020 (Oct. 6, 2020), https://www.americanprogress.org/issues/lgbtq-rights/reports/2020/10/06/491052/state-lgbtq-community-2020/.
\41\ Sharita Gruberg et al, Center for American Progress, The
State of the LGBTQ Community in 2020 (Oct. 6, 2020), https://www.americanprogress.org/issues/lgbtq-rights/reports/2020/10/06/491052/state-lgbtq-community-2020/.
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We believe that prohibiting discrimination based on sexual
orientation or gender identity can lead to improved health outcomes for
this community \42\ and that the removal of such protections in the
2020 section 1557 final rule frustrated not only guaranteed
availability requirements, but also the broader aim of improving health
equity. Without protection from discrimination, individuals may
continue to face barriers to accessing medically necessary health care.
For example, without protection from discrimination, transgender
individuals may face barriers or be denied medically necessary gender-
affirming care. We believe amending the nondiscrimination protections
as proposed at Sec. 147.104(e) to again explicitly prohibit
discrimination based on sexual orientation and gender identity is
warranted in light of the existing trends in health care discrimination
and to better address barriers to health equity for LGBTQI+
individuals.\43\ As proposed, such revisions to Sec. 147.104(e) would
also support the original objective of ensuring consistency against
employing discriminatory marketing practices and benefit designs, as we
are proposing parallel changes to nondiscrimination regulations at
Sec. Sec. 147.104(e), 155.120(c), 155.220(j), 156.125(b), 156.200(e),
and 156.1230(b).
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\42\ Ward, BW, Dahlhamer, JM, Galinsky, AM, and Joestl, SS.
Sexual Orientation & Health Among U.S. Adults: National Health
Interview Survey, CDC National Health Statistics Report 77, 2014.
\43\ Nguyen, T.T., Vable, A.M., Glymour, M.M. et al. Trends for
Reported Discrimination in Health Care in a National Sample of Older
Adults with Chronic Conditions. J GEN INTERN MED 33, 291-297 (2018).
https://doi.org/10.1007/s11606-017-4209-5.
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If any of the provisions at Sec. Sec. 147.104(e), 155.120(c),
155.220(j), 156.125(b), 156.200(e), and 156.1230(b) are held to be
invalid or unenforceable by its terms, or as applied to any person or
circumstance, it shall be severable from this part and shall not affect
the remainder thereof or the application of the provision to other
persons not similarly situated or to other dissimilar circumstances. In
enforcing the nondiscrimination provisions in the corresponding CMS
regulations, HHS will comply with laws protecting the exercise of
conscience and religion, including the Religious Freedom Restoration
Act (42 U.S.C. 2000bb through 2000bb-4) and all other applicable legal
requirements.
We seek comment on this proposal.
C. Part 153--Standards Related to Reinsurance, Risk Corridors, and Risk
Adjustment
In subparts A, D, G, and H of part 153, we established standards
for the administration of the risk adjustment program. The risk
adjustment program is a permanent program created by section 1343 of
the ACA that transfers funds from lower-than-average risk, risk
adjustment covered plans to higher-than-average risk, risk adjustment
covered plans in the individual, small group markets, or merged
markets, inside and outside the Exchanges. In accordance with Sec.
153.310(a), a state that is approved or conditionally approved by the
Secretary to operate an Exchange may establish a risk adjustment
program, or have HHS do so on its behalf.\44\ HHS did not receive any
requests from states to operate risk adjustment for the 2023 benefit
year. Therefore, HHS will operate risk adjustment in every state and
the District of Columbia for the 2023 benefit year.
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\44\ Also see 42 U.S.C. 18041(c)(1).
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1. Sequestration
In accordance with the OMB Report to Congress on the Joint
Committee Reductions for Fiscal Year 2022, the permanent risk
adjustment program is subject to the fiscal year 2022
sequestration.\45\ The federal government's 2022 fiscal year begins
October 1, 2021. Therefore, the risk adjustment program will be
sequestered at a rate of 5.7 percent for payments made from fiscal year
2022 resources (that is, funds collected during the 2022 fiscal year).
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\45\ https://www.whitehouse.gov/wp-content/uploads/2021/05/BBEDCA_251A_Sequestration_Report_FY2022.pdf.
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HHS, in coordination with OMB, has determined that, under section
256(k)(6) of the Balanced Budget and Emergency Deficit Control Act of
1985 (Pub. L. 99-177, enacted December 12, 1985), as
[[Page 598]]
amended, and the underlying authority for the risk adjustment program,
the funds that are sequestered in fiscal year 2022 from the risk
adjustment program will become available for payment to issuers in
fiscal year 2023 without further Congressional action. If Congress does
not enact deficit reduction provisions that replace the Joint Committee
reductions, the program would be sequestered in future fiscal years,
and any sequestered funding would become available in the fiscal year
following that in which it was sequestered.
Additionally, we note that the Coronavirus Aid, Relief, and
Economic Security (CARES) Act amended section 251A(6) of the Balanced
Budget and Emergency Deficit Control Act of 1985 and extended
sequestration for the risk adjustment program through fiscal year 2030
at a rate of 5.7 percent per fiscal year.\46\
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\46\ https://www.congress.gov/116/bills/s3548/BILLS-116s3548is.pdf.
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2. HHS Risk Adjustment (Sec. 153.320)
The HHS risk adjustment models predict plan liability for an
average enrollee based on that person's age, sex, and diagnoses (also
referred to as hierarchical condition categories (HCCs)), producing a
risk score. The HHS risk adjustment methodology utilizes separate
models for adults, children, and infants to account for clinical and
cost differences in each age group. In the adult and child models, the
relative risk assigned to an individual's age, sex, and diagnoses are
added together to produce an individual risk score. Additionally, to
calculate enrollee risk scores in the adult models, we added enrollment
duration factors beginning with the 2017 benefit year, and prescription
drug categories (RXCs) beginning with the 2018 benefit year.\47\ Infant
risk scores are determined by inclusion in one of 25 mutually exclusive
groups, based on the infant's maturity and the severity of diagnoses.
If applicable, the risk score for adults, children, or infants is
multiplied by a CSR factor. The enrollment-weighted average risk score
of all enrollees in a particular risk adjustment covered plan (also
referred to as the plan liability risk score) within a geographic
rating area is one of the inputs into the risk adjustment state payment
transfer formula, which determines the state transfer payment or charge
that an issuer will receive or be required to pay for that plan for the
applicable state market risk pool. Thus, the HHS risk adjustment models
predict average group costs to account for risk across plans, in
keeping with the Actuarial Standards Board's Actuarial Standards of
Practice for risk classification.
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\47\ For the 2018 benefit year, there were 12 RXCs, but starting
with the 2019 benefit year, the two severity-only RXCs were removed
from the adult risk adjustment models. See, for example, 83 FR
16941.
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a. Data for Risk Adjustment Model Recalibration for 2023 Benefit Year
and Beyond
We are proposing to recalibrate the 2023 benefit year risk
adjustment models with the 2017, 2018, and 2019 enrollee-level EDGE
data. Consistent with the approach outlined in the 2020 Payment Notice
to no longer rely upon MarketScan[supreg] data for recalibrating the
risk adjustment models, we will recalibrate the risk adjustment models
for the 2023 benefit year using only enrollee-level EDGE data, and we
will continue to use blended, or averaged, coefficients from the 3
years of separately solved models for the 2023 benefit year model
recalibration.\48\ Additionally, as outlined in the 2022 Payment
Notice, we will use the 3 most recent consecutive years of enrollee-
level EDGE data that are available at the time we incorporate the data
in the draft recalibrated coefficients published in the proposed rule
for the applicable benefit year,\49\ and will not update the
coefficients between the proposed and final rules if an additional year
of enrollee-level EDGE data becomes available for incorporation.\50\ We
believe this promotes stability, better meets the goal of the risk
adjustment program, and allows issuers more time to incorporate this
information when pricing their plans for the upcoming benefit year.
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\48\ 84 FR 17463 through 17466.
\49\ While we do receive the next year of enrollee-level EDGE
data prior to the proposed rule, that data must go through several
quality and analysis checks before it is useable for risk adjustment
model recalibration.
\50\ 86 FR 24140 at 24152.
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As such, we propose to determine coefficients for the 2023 benefit
year based on a blend of separately solved coefficients from the 2017,
2018, and 2019 benefit years' enrollee-level EDGE data.\51\ The draft
coefficients listed in Tables 1 through 6 reflect the use of 2017,
2018, and 2019 benefit year enrollee-level EDGE data, as well as other
risk adjustment model updates proposed in this proposed rule (including
changes to the model specifications, the pricing adjustment to
Hepatitis C drugs, and the removal of the mapping of hydroxychloroquine
sulfate to an RXC). However, we note that the coefficients could change
if we identify an error or if some or all of the proposed model changes
are not finalized or are modified in response to comments. In addition,
consistent with Sec. 153.320(b)(1)(i), if we are unable to finalize
the final coefficients in time for publication in the final rule, we
would publish the final coefficients for the 2023 benefit year in
guidance soon after the publication of the final rule. We seek comment
on the proposal to determine 2023 benefit year coefficients based on a
blend of separately solved coefficients from the 2017, 2018, and 2019
enrollee-level EDGE data.
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\51\ As discussed later in this proposed rule, we propose to
remove the mapping of hydroxychloroquine to RXC 09 (Immune
Suppressants and Immunomodulators) and the related RXC 09
interactions.
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We also solicit comments on the future use of the 2020 enrollee-
level EDGE data due to the COVID-19 PHE. Under current policy, 2020
enrollee-level EDGE data would be used in recalibration of the HHS risk
adjustment models for the 2024 benefit year and that data would
continue to be used for the 2025 and 2026 benefit year models.\52\
Although HHS has not analyzed the 2020 enrollee-level EDGE data yet, we
solicit comment on the future use of the 2020 enrollee-level EDGE data
for the annual recalibration of the HHS risk adjustment models.
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\52\ Consistent with the approach finalized in the 2022 Payment
Notice, use of the 3 most recent consecutive years of enrollee-level
EDGE data would result in the use of 2018, 2019, and 2020 enrollee-
level EDGE data for the recalibration of the 2024 benefit year
models; the use of 2019, 2020, and 2021 enrollee-level EDGE data for
recalibration of the 2025 benefit year models; and the use of 2020,
2021, and 2022 enrollee-level EDGE data for recalibration of the
2026 benefit year models.
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b. Risk Adjustment Model Updates
Beginning with the 2023 benefit year, we are proposing three
modeling updates to the risk adjustment models. Consistent with the
potential model updates discussed in the 2021 RA Technical Paper, we
propose the following model updates, which are the same as those
proposed but not finalized in the 2022 Payment Notice: \53\ (1) Adding
a two-stage weighted model specification to the adult and child models;
(2) removing the severity illness factors in the adult models and
[[Page 599]]
replacing them with new severity and transplant indicators interacted
with HCC count factors in the adult and child models; and (3) replacing
the current enrollment duration factors in the adult models with HCC-
contingent enrollment duration factors in the adult models.
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\53\ See 85 FR 78572 at 78583-78586. In the 2022 Payment Notice
Final Rule, in response to comments, we did not finalize the
proposed updates and announced that we would publish a technical
paper on the proposed model changes; see 86 FR 24140 at 24151-24162.
See also the 2021 HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and the HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes: Summary
Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
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As described in prior rulemakings and in the 2021 RA Technical
Paper, the current HHS-HCC models, which are linear models,
underpredict plan liability for enrollees without HCCs and the lowest
expected expenditures, underpredict plan liability for enrollees with
the highest HCC counts and the highest expected expenditures, and
underpredict plan liability for partial-year enrollees with HCCs.\54\
The proposals in this proposed rule are intended to improve the risk
adjustment adult and child models' prediction for these subpopulations.
We released the 2021 RA Technical Paper in response to stakeholder
requests for more information on the impacts of these proposals before
they were adopted and released simulated transfer estimates reflecting
the combination of these proposed changes in December 2021.\55\ We
continue to believe the combination of these proposed model changes
will improve the current models' predictive accuracy for the lowest-
risk enrollees, certain partial-year adult enrollees, and the very
highest-risk enrollees, while limiting trade-offs in other areas of
model performance and complexity. As such, we are re-proposing these
combined model specification changes in this rule, and the following
sections describe these proposed model specification changes in detail.
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\54\ See, for example, 85 FR 29164 at 29188-29190; 85 FR 78572
at 78583-78586; and 86 FR 24140 at 24151-24162. See also the 2021
HHS-Operated Risk Adjustment Technical Paper on Possible Model
Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\55\ See the 2021 HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and the HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes: Summary
Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
Issuers that participated in the simulation also received issuer-
specific data, including risk score and transfer estimates for the
simulated results.
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i. Two-Stage Weighted Model Specification
We propose to use a two-stage weighted model specification to
recalibrate the adult and child risk adjustment models starting with
the 2023 benefit year to improve the underprediction of plan liability
for the lowest-risk enrollees (that is, enrollees in low risk deciles
and enrollees without HCCs).\56\ Since approximately 80 percent of
enrollees in the individual and small group (or merged) markets do not
have HCCs, this underprediction, while small in magnitude, represents a
large number of enrollees.\57\
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\56\ When we refer to the enrollees without HCCs, we are
referring to enrollees without payment HCCs.
\57\ See Chapter 2 of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf, and the HHS-
Operated Risk Adjustment Technical Paper on Possible Model Changes:
Summary Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
---------------------------------------------------------------------------
To improve prediction for the lowest-risk enrollees, we explored
calibrating the adult and child models in two stages to reweight the
healthier enrollees more heavily. In the first-stage estimation, the
model coefficients would be estimated using the current model
specifications; and in the second stage, we would re-estimate the model
weighting enrollees in the recalibration sample by the capped
reciprocal of the predicted values of relative expenditures from the
first step estimation with the same model specification. More
specifically, the first stage of this proposed weighted estimation
method for the adult models involves a linear regression (weighted by
the person-specific eligibility fraction of the number of months
enrolled divided by 12) of simulated plan liability \58\ on age-sex
factors, payment HCC factors, severity illness factors,\59\ the
enrollment duration factors,\60\ and RXCs. For the child models, the
first stage of the proposed weighted estimation method involves a
linear regression of simulated plan liability on age-sex factors and
payment HCC factors.\61\ The methodology for conducting the proposed
first stage regression would be essentially identical to the current
adult and child risk adjustment recalibrations. The second stage of the
proposed two-stage weighted model specification involves using
recalibration sample enrollees' inverse (also referred to as
reciprocal) capped predictions from the first stage as weights for a
second linear regression. As such, this step has the material effect of
weighting healthier enrollees more heavily so that the statistical
model predicts their expenditures more accurately. It also
systematically reduces the influence of very expensive enrollees on the
final model factors.
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\58\ We simulate plan liability expenditures for each metal
level for each enrollee in the recalibration dataset (that is, we
apply different standardized benefit design parameters to the same
sample for each metal level). See https://www.cms.gov/mmrr/Downloads/MMRR2014_004_03_a03.pdf.
\59\ We are also proposing to remove the current severity
illness indicators in the adult models and add new severity and
transplant indicators interacted with HCC count factors in the adult
and child models, as described elsewhere in this proposed rule.
\60\ We are also proposing to modify the enrollment duration
factors in the adult models, as described elsewhere in this proposed
rule.
\61\ See supra note 58.
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To help provide stability to the proposed two-stage weighted model
specification, we imposed lower and upper bound caps on the first-stage
predictions at the 2.5th and 97.5th percentiles in the adult models,
and the 2.5th and 99.5th percentiles in the child models. This capped
weighted approach avoids excessively large or small weights for any
observations for the second stage estimation, and therefore mitigates
the potential to underpredict at the high end for expensive enrollees,
as well as any possible low-end overprediction of healthier enrollees.
We tested various caps for the weights based on the distribution of
costs and found these lower and upper bound caps achieved better
prediction on average.\62\
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\62\ See Section 2.2 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. Also see 85
FR at 78667 and 86 FR at 24283.
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Additionally, in our consideration of the two-stage weighted model
specification, we tested various methods of determining weights for the
second stage, including reciprocals of the square root of predictions,
log of predictions, and residuals from the first stage estimation, but
the reciprocal of the capped predictions from the first stage resulted
in better predictive ratios for low-cost enrollees compared to any of
these alternative weighting functions.\63\
---------------------------------------------------------------------------
\63\ Ibid.
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Our conceptual reasoning for pursuing the two-stage weighted model
specification is to retain the simple linear, additive structure of the
current models while forcing the model to better predict lowest-risk
enrollees, who our analyses identified as underpredicted in the current
adult and child models. Based on analyses using 2018 enrollee-level
EDGE data, the two-stage weighted approach significantly improves the
predictive ratios (PRs) of the lower deciles and the PRs for enrollees
without HCCs compared to the current models.\64\ Similar results were
also seen when using 2016 and 2017 enrollee-
[[Page 600]]
level EDGE data.\65\ In addition, the two-stage weighted approach
eliminated the overprediction observed in risk decile 8.\66\ We also
found that the two-stage weighted approach did not meaningfully change
factor coefficients for most HCCs, providing stability to the risk
adjustment model factors.
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\64\ See Figure 2.2 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\65\ The PRs calculated in the 2021 RA Technical Paper are
calculated using the same samples on which the models were
calibrated. However, as is common practice in evaluating model fit,
we also tested splitting the sample for calibration and validation
purposes and the results were unchanged. Further, for purposes of
the analysis in the 2021 RA Technical Paper, we calculated PRs for
at least three data years and the results always appear the same. We
therefore generally only reported results in the 2021 RA Technical
Paper from the 2018 data year, which was the most recently available
dataset at the time that we ran these analyses in preparation for
announcing the proposed model changes in the proposed 2022 Payment
Notice.
\66\ See Figure 2.2 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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At the same time, we also considered whether the two-stage weighted
approach worsens the fit of the models along other dimensions,
identifying three areas that had minor, negative impacts on the model
fit. First, the two-stage weighted approach predicts plan liability by
age-sex factor less accurately than the current models, especially for
younger and older women. Overall, we considered this to be an
acceptable trade-off, because across all age and sex factors, most PRs
were within a tolerable threshold of +/-5 percent (for example, 0.95 to
1.05), and the two-stage weighted approach has the major benefit of
more accurately predicting the age-sex factors for the enrollees
without HCCs, which is a much larger population than enrollees with
HCCs. Second, the two-stage weighted approach is somewhat less accurate
at predicting certain HCCs, with the two-stage weighted approach
worsening adult model silver plan PRs by at least 5 percentage points
for 14 (out of 91) ungrouped HCCs and 3 (out of 18) grouped HCCs. For
the vast majority of HCCs, the impact is very small and most affected
HCCs or HCC groups have small sample sizes.\67\ Again, we considered
this reduced accuracy to be an acceptable trade-off because most of the
PRs for the two-stage weighted approach were within a tolerable
threshold of +/-5 percent (for example, 0.95 to 1.05), most enrollees
do not have HCCs, and the two-stage weighted approach predicts plan
liability better for those no HCC enrollees. Third, the two-stage
weighted approach had lower R-squared values compared to the current
models. However, the decrease in R-squared is at most 0.1 percentage
points for all metal levels, which is a minor reduction in fit across
models.\68\ Similar to the worsening of the age-sex cell and the HCC
PRs, we were not concerned about the lower R-squared as the reduction
in fit was minor at all metal levels, the values remained within the
range of R-squared statistics of other concurrent models predicting
expenditures for commercial insurance enrollees,\69\ and the proposed
two-stage weighted model specification better predicts plan liability
for enrollees with no HCCs, which is the majority of enrollees. After
considering the impact of the approach on model performance, we
determined that the proposed two-stage weighted model specification
does not have material unintended consequences in model performance and
achieves the aim of improving the predictive accuracy of the current
adult and child models for enrollees in the lowest risk deciles and for
enrollees without HCCs. For these reasons, we believe that the two-
stage weighted approach can improve prediction for lowest-risk
enrollees with limited trade-offs in other parts of the models'
performance. Therefore, we are proposing to add the two-stage weighted
model specification to the adult and child models beginning with the
2023 benefit year in combination with the proposed interacted HCC
counts model specification and the updated adult model enrollment
duration factors described later in this proposed rule.
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\67\ For example, only one HCC or HCC group whose PR was
identified in our analysis as worsening by at least 5 percentage
points was present in greater than 1 percent of the adult silver
plan enrollees in the 2018 enrollee-level EDGE dataset (HCC 142
Specified Heart Arrhythmias). Our analysis found that all other HCCs
had recalibration dataset frequencies of less than 0.5 percent of
enrollees. See Chapter 2.3 and Table 2.1 in the 2021 HHS-Operated
Risk Adjustment Technical Paper on Possible Model Changes, available
at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\68\ See Figure 2.6 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\69\ See Winkelman, R., & Mehmud, S. (2007). A Comparative
Analysis of Claims-Based Tools for Health Risk Assessment.
Schaumberg, IL: Society of Actuaries.
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In the 2021 RA Technical Paper, we explained that we believe that
by addressing the underprediction of costs associated with lowest-risk
enrollees in the adult and child models, we could further encourage the
retention and offering of plans that enroll a higher proportion of this
subpopulation of enrollees. We believe issuers offering these types of
plans are at greater risk of exiting the market if transfers calculated
under the state payment transfer formula undercompensate for the true
plan liability of the lowest-risk enrollees. We received stakeholder
comments in this regard, noting that the underprediction of the lowest-
risk enrollees could disincentivize issuers from attracting healthy
enrollees to their plans, thereby undermining the goals of developing a
healthy and stable market and encouraging competition on the basis of
high quality rather than risk selection. However, other stakeholders
have questioned if we should focus model changes on improving
prediction for the lowest-risk enrollees when the risk adjustment
program is intended to reduce incentives for issuers to avoid enrolling
individuals with higher risk.
We also received comments concerned that the two-stage weighted
model would be redundant of other elements in the state payment
transfer formula, which stated that the administrative cost adjustment
to statewide average premium \70\ already addresses some of the
underprediction of the lowest-risk enrollees in the risk adjustment
models. We clarify that the proposed two-stage weighted model
specification and existing administrative cost adjustment to statewide
average premium are not redundant and address separate considerations.
As detailed in the 2018 Payment Notice, the purpose of the
administrative cost adjustment to statewide average premium is to
exclude fixed administrative costs that are not dependent on enrollee
risk, such as taxes.\71\ In contrast, and as previously described
elsewhere,\72\ the purpose of the proposed two-stage weighed model
specification is to improve the current adult and child models'
prediction for the lowest risk enrollees.
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\70\ 81 FR at 94099-94100.
\71\ See 81 FR at 61488-61489. Also see 81 FR at 94099-94100.
\72\ See Section 2.2 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. Also see 85
FR at 78667 and 86 FR at 24283.
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We seek comment on the two-stage weighted model specification
proposal, specifically regarding whether we should implement the
proposed two-stage weighted model specification alone, independent of
the other proposed model specification changes outlined in this rule,
beginning with the 2023 benefit year; whether we should implement the
proposed two-stage weighted model specification in conjunction with
these other proposals; or whether we should not implement the two-stage
weighted model specification at all. Additionally, given the
stakeholder comments we received
[[Page 601]]
questioning the need for this type of model update, we also generally
solicit comments on whether we should seek to improve the current
models' prediction for the lowest-risk enrollees.
ii. Interacted HCC Counts Model Specification
In addition to the two-stage weighted approach, we are proposing to
add an interacted HCC counts model specification to the adult and child
risk adjustment models starting with the 2023 benefit year to address
the current models' underprediction of plan liability for the very
highest-risk enrollees (that is, those in the top risk percentile and
those enrollees with the most HCCs). While this highest-risk
subpopulation represents a small number of enrollees, it represents a
large portion of expenditures. As described in the 2021 RA Technical
Paper, enrollees in risk decile 10 represent roughly 74.29 percent of
actual plan liability, compared to only 1.36 percent for enrollees in
risk decile 1.\73\ We found that for enrollees with a high HCC count,
there is an increasing, non-linear effect that leads to higher costs
than are currently predicted by adding up the incremental effects of
each HCC.
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\73\ See Table 4.1 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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Therefore, to address the underprediction of the highest-cost
enrollees, we explored the addition of severity and transplant factors
interacted with HCC counts in the adult and child models, wherein a
factor flagging the presence of at least one severe or transplant
payment HCC is interacted with counts of the enrollee's payment
HCCs.\74\ The purpose of adding severity and transplant factors
interacted with HCC count factors to the adult and child models is to
address the underprediction of the highest risk enrollees (as the
proposed two-stage-weighted model specification addresses the
underprediction of the healthiest enrollees) by accounting for the fact
that costs of certain HCCs rise significantly when they occur with
multiple other HCCs. Specifically, the goals of this approach were to:
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\74\ For HCCs in a coefficient estimation group, the group is
counted at most once. These groups of HCCs in the HHS risk
adjustment adult and child models are detailed in the HHS-Developed
Risk Adjustment Model Algorithm ``Do It Yourself (DIY)'' Software
``Additional Adult Variables'' and ``Additional Child Variables''
table logic (Tables 6 and 7 in the 2021 Benefit Year DIY Software).
The August 3, 2021 version of the DIY software is available at
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
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1. Address the non-linearity in costs between enrollees without
HCCs or with very low costs and enrollees with multiple HCCs or with
high costs;
2. Empirically incorporate the cost impact of multiple complex
diseases; and
3. Reduce incentives for coding proliferation to mitigate the
gaming concerns with HCC counts models.
In developing this interacted HCC counts approach, we identified
common HCCs for enrollees with extremely high costs, as well as HCCs
that were being underpredicted in the current risk adjustment adult and
child models. We found that many of the HCCs that were flagged as being
underpredicted were the current severe illness HCCs, the transplant
HCCs, and other HCCs related to the severity of disease. Therefore, we
considered dropping the current severity illness factors in the adult
models and replacing them with severity and transplant factors
interacted with HCC count factors in the adult models, as well as
adding the severity and transplant factors interacted with HCC count
factors to the child models.
We propose the inclusion of the factors in Tables 1 and 2 as the
interacted severity and transplant factors in the adult and child
models starting with the 2023 benefit year. We separated out transplant
HCCs and severity HCCs into their own separate set of interacted
factors, as expressed in Tables 1 and 2, because we found that this
approach improved prediction for high-cost enrollees better than an
approach that combined severity and transplant HCCs into a single set
of factors. Furthermore, under the current risk adjustment models,
adult severity illness interaction factors are collapsed into a single
binary variable indicating the presence of any severity illness
interaction. In contrast, the proposed severity factors would not be
collapsed and would instead be separated out by the HCC count with
which the severity or transplant illness indicator was interacted.
We defined the new proposed interaction factors such that an
enrollee would receive one or more of these factors if they had any
HCCs in the severity or transplant indicator groups in Table 3 and
according to how many HCCs were recorded in the enrollee's data in
total. As such, the proposed severity and transplant interaction
factors would express the presence of one or more of the selected
severity or transplant HCCs in Table 3. That is, an enrollee must have
at least one HCC in the ``severity'' or ``transplant'' indicator groups
in Table 3 to receive the interacted HCC count factor toward their risk
score, but would not receive any additional flags for having more than
one of the ``severity'' or ``transplant'' HCCs in an indicator group
beyond the total HCC count.
The proposed severity-HCC-count-interaction factors were calculated
as 10 separate factors for the adult models, and seven separate factors
for the child models. In the adult models, the first nine factors
specified the presence of (1) an HCC in the severity list in Table 3
and (2) exactly one payment HCC in the enrollee's data, exactly two,
exactly three, and so on, up to exactly nine payment HCCs. The tenth
factor specified the presence of (1) an HCC in the severity list in
Table 3 and (2) ten or more payment HCCs in the enrollee's data. For
the child models, the first five factors represented the presence of
(1) an HCC in the severity list in Table 3 and (2) exactly one payment
HCC in the enrollee's data, exactly two, exactly three, and so on, but
the sixth factor represents the presence of (1) an HCC in the severity
list in Table 3 and (2) six to seven payment HCCs, and the seventh
factor represents the presence of (1) an HCC in the severity list in
Table 3 and (2) eight or more payment HCCs in the enrollee's data.
The proposed transplant-HCC-count-interaction factors were
calculated similarly. However, the transplant factors were calculated
using a different range of HCC counts. In the adult models, five
separate transplant interaction factors were created, representing the
presence of (1) an HCC in the transplant list in Table 3 and (2)
payment HCC counts of exactly four, exactly five, exactly six, exactly
seven, and eight or more payment HCCs in the enrollee's data. For the
child models, we created only one transplant interaction factor
indicating the presence of (1) an HCC in the transplant list in Table 3
and (2) a total of four or more payment HCCs in the enrollee's data. As
detailed later in this section, this treatment of transplant-HCC-count-
interaction factors stabilized the child model estimates by increasing
the sample size used to estimate the factor coefficients.
To illustrate how the proposed severity- (or transplant-) HCC-
count-interaction factors would be assigned to an enrollee, consider an
adult enrollee with four payment HCCs, one of which is HCC 34 ``Liver
Transplant Status/Complications''. Because HCC 34 appears in both the
severity and transplant indicator groups in Table 3, this enrollee
would receive the following factor coefficients toward their risk score
in the adult models: (1) The four factor coefficients for their
individual HCCs (the three non-transplant HCC factors and the HCC 34
[[Page 602]]
transplant HCC factor), (2) the factor coefficient for the severity-
HCC-count-interaction indicating four payment HCCs, and (3) the factor
coefficient for the transplant-HCC-count-interaction indicating four
payment HCCs.\75\ The child model would operate similarly. For a child
enrollee with a transplant HCC in the transplant factor group and three
other payment HCCs, the following would be used to calculate the
enrollee's risk score: (1) The factor coefficients for all four HCCs
(that is, the three non-transplant HCCs and the transplant HCC), (2)
the factor coefficient for the severity-HCC-count-interaction
indicating four payment HCCs, and (3) the factor coefficient for the
transplant-HCC-count-interaction indicating four or more payment HCCs.
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\75\ This is in addition to other factors that the adult
enrollee has that are used to calculate their risk score (such as
the applicable demographic factors, RXCs (if any), and the
applicable enrollment duration factors).
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To implement the severity- and transplant-HCC-count-interaction
factors in the regression model and estimate the value of their factor
coefficients, we are proposing to remove the current severity illness
factors in the adult models, and add severity- and transplant-HCC-
count-interaction factors for the adult and child models beginning with
the 2023 benefit year. Although the severity (or transplant) HCC-count-
interaction factor coefficients may be estimated as having negative
values, the combination of these interaction factor coefficients with
the factor coefficient of the HCC that triggered the severity factor
will always be positive. For example, the proposed adult silver metal
level model factor coefficient for Viral or Unspecified Meningitis (HCC
04), which is proposed as a severe illness HCC, is 6.914, when combined
with the proposed severity-HCC-count-interaction factor coefficient for
one HCC of -4.603 (indicating that the enrollee only has HCC 04 present
in their data), would increase the enrollee's risk score by 2.311.
Moreover, an increase in the count of HCCs would lead to a monotonic
increase in the enrollee risk score, because the severity-HCC-count-
interaction factor coefficients are less negative (and sometimes
positive) with a larger number of payment HCCs.
One potential concern with this proposed model specification change
is that the severity- and transplant-HCC-count-interaction factor
coefficients might be based on small sample sizes. In recognition of
this issue, we considered sample sizes of the various interacted HCC
count factors when developing this proposal and the proposed factor
coefficients. We explored alternative methods of interacting HCC counts
with severity and transplant HCCs, including interacting the HCC counts
with individual selected severity and transplant HCCs, but found that
interacting the HCC counts with a factor indicating the presence of at
least one of the selected HCCs in each group produced PR improvements
and sufficient sample sizes for reasonably stable factor coefficient
estimates. To that end, we analyzed 2016, 2017, and 2018 enrollee-level
EDGE data and chose the model specifications that grouped the HCC
counts interacted with individual severity and transplant HCCs into two
sets of aggregated factors to maximize sample size, reduce concerns of
overfitting the model, and reduce the number of factors being added to
the models. More specifically, in the adult models, we found that
starting with 4+ HCCs for the transplant interacted factors improved
predictions of enrollees at the very high end in terms of risk and cost
and ending at 8+ HCCs for the transplant interacted factors, instead of
10+ HCCs, addressed the small sample sizes of enrollees with a
transplant and 9 or more HCCs. For the child models, we found having
one transplant interacted factor for 4+ HCCs provided more stable
estimates given the smaller sample sizes for children than those for
adults. With the proposed structure for transplant and severity
interacted factors in place, the resulting sample sizes for both
proposed sets of factors in the child and adult models in the proposed
2022 Payment Notice and in this rule are consistent with the sample
sizes used for individual HCCs in the adult and child risk adjustment
models.
We also considered potential gaming concerns in developing the
proposed interacted HCC counts factors. We believe that the proposal to
restrict the incremental risk score adjustment to enrollees with at
least one severe illness HCC, which accounts for less than 2 percent of
the adult enrollee-level EDGE data population across the 2016, 2017,
and 2018 benefit years, helps mitigate the concern that issuers may
attempt to inflate HCC counts to influence their transfers under the
state payment transfer formula. In other words, the scope for
potentially inflating HCC coding frequency under this proposal would be
limited to a small fraction of total enrollees, in contrast to an
approach that would interact HCC counts for any payment HCC, where a
payment HCC is present in approximately 20 percent of the adult
enrollee population across the same three benefit years of enrollee-
level EDGE data.\76\ We also note that enrollees with interacted HCCs
are likely to have more HCCs and higher risk scores and therefore are
more likely to be sampled and have their risk scores reviewed in the
HHS-operated risk adjustment data validation (HHS-RADV) process due to
our use of stratified sampling and application of the Neyman
allocation.\77\
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\76\ This analysis was based on 2016, 2017, and 2018 enrollee-
level EDGE data. See Chapter 4.2 in the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes, available at
https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\77\ For a discussion of our use of stratified sampling and
application of the Neyman allocation, see 79 FR at 13756-13758; and
84 FR at 17494-17495.
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Our analysis of the proposed interacted HCC counts factors combined
with the proposed HCC-contingent enrollment duration factors in the
adult models (discussed in the following section) significantly
improves predictions across most deciles and HCC counts for the very
highest-risk enrollees, as well as the lowest-risk enrollees without
HCCs. Specifically, as described in the 2021 RA Technical Paper, the
proposed interacted HCC counts approach improves the PRs for enrollees
across most HCC counts, with significant improvements for enrollees
with high numbers of HCCs (greater than 6).\78\ The proposed interacted
HCC counts approach also demonstrated improved R-squared statistics
across all metal levels in the adult and child models using 2016, 2017,
and 2018 enrollee-level EDGE data.\79\
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\78\ See Figure 4.3 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\79\ See Figure 4.4 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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Some commenters on the 2021 RA Technical Paper were concerned about
potential data bias because of the exclusion of enrollees with
capitated claims from the analytic sample used to test the model
specification changes. As previously stated in the 2016 RA White
Paper,\80\ we have historically excluded enrollees with capitated
claims from the recalibration sample due to concerns that methods for
computing and reporting derived amounts from capitated claims would not
result in
[[Page 603]]
reliable data for recalibration or analysis.\81\
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\80\ See the March 2016 Risk Adjustment Methodology White Paper
(March 24, 2016), available at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf.
\81\ See Chapter 1.4 in the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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Beyond the predictive improvements, an additional benefit of the
proposed interacted HCC count model specification is that it would not
overhaul the existing risk adjustment factors and would instead build
upon the current models. Additionally, the factors would remain fairly
stable, could be used in combination with other refinements and model
updates, and could be easily modified, adjusted, expanded, or
constrained in the future to include additional HCCs or to remove HCCs.
For all of these reasons, we are proposing to add the proposed
interacted HCC counts model specification as outlined above to the
adult and child risk adjustment models beginning with the 2023 benefit
year.
We seek comment on this proposal, specifically regarding whether we
should implement the proposed interacted HCC counts model specification
alone, independent of the other proposed model specification changes
outlined in this rule, beginning with the 2023 benefit year; whether we
should implement the proposed interacted HCC counts model specification
in conjunction with these other proposals; or whether we should not
implement the proposed interacted HCC counts model specification at
all. We also seek comment on the variations on the HCC counts model
specification discussed in this section, including whether we should
interact severity or transplant factors with individual HCCs, or should
interact HCC counts with individual selected severity and transplant
HCCs, rather than interacting HCC counts with only an indicator of the
presence of severity or transplant HCCs, as proposed. Finally, we seek
comment on the proposed list of severity and transplant HCCs in Table 3
that would be used to calculate the proposed interacted HCC count
factor coefficients and whether other HCCs should be to added to the
proposed list that trigger the interacted HCC count factor coefficients
or whether any of the HCCs on the proposed list should be removed.
iii. Changes to the Adult Model Enrollment Duration Factors \82\
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\82\ As explained in the 2021 Payment Notice proposed rule, we
found that partial year enrollees in the child models did not have
the same risk differences as partial year enrollees in the adult
models and they tended to have similar risk to full year enrollees
in the child models. See 85 FR 7103-7104. In the infant models, we
found that partial year infants had higher expenditures on average
compared to their full year counterparts; however, the incorporation
of enrollment duration factors created interaction issues with the
current severity and maturity factors and did not have a meaningful
impact on the general predictive accuracy of the infant models.
Ibid. We therefore propose to continue to apply enrollment duration
factors to the adult models only.
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In addition to the proposed two-stage weighted model specification
and the interacted HCC counts model specification, we are also
proposing to change the enrollment duration factors in the adult risk
adjustment models to improve the prediction for partial-year adult
enrollees with and without HCCs. Although the value for the factors
change from year to year as part of the annual recalibration of the
adult models, we have not made changes to the structure of the
enrollment duration factors since they were first adopted for the 2017
benefit year. To develop the current enrollment duration factors for
the adult models, we reviewed the annualized predicted expenditures,
actual expenditures, and PRs by enrollment duration groups (for each: 1
month, 2 months, and so on up to 12 months) for our risk adjustment
concurrent modeling sample, which was made up of adults in the 2014
MarketScan[supreg] data.\83\ This analysis found that actuarial risk
for adult enrollees with short enrollment periods tended to be
underpredicted in our methodology, and actuarial risk for adult
enrollees with full enrollment periods (12 months) tended to be
overpredicted. We therefore proposed and finalized in the 2018 Payment
Notice that, beginning for the 2017 benefit year, the adult models
would include enrollment duration factors that apply to all adults with
partial-year enrollment.\84\ The value for the enrollment duration
factors have generally decreased since they were first introduced in
the adult models for the 2017 benefit year, reflecting a reduced impact
of enrollment duration on risk scores of partial year enrollees. After
a slight increase between 2017 and 2018, the factors have decreased
significantly from 2018 to 2021, and in some cases (the 10- and 11-
month factors) the factors are now 0.000, relative to a 12-month
enrollment baseline.\85\
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\83\ See pages 35-39 of the March 2016 Risk Adjustment
Methodology White Paper (March 24, 2016), available at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf.
\84\ 81 FR 94058 at 94071-94074.
\85\ In unconstrained models, these factors are negative;
therefore, we constrained them to zero because we do not believe
negative enrollment duration factors are appropriate, as this would
create inappropriate incentives. See Figure 3.1 in the 2021 HHS-
Operated Risk Adjustment Technical Paper on Possible Model Changes,
available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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As described in prior rulemakings and the 2021 RA Technical Paper,
we have been considering potential adjustments to the enrollment
duration factors and our more recent analysis of enrollee-level EDGE
data found that the current adult model enrollment duration factors
underpredicted plan liability for partial-year adult enrollees with
HCCs and overpredicted plan liability for partial-year adult enrollees
without HCCs.\86\ \87\ More specifically, our analysis of 2017 and 2018
enrollee-level EDGE data found that the current enrollment duration
factors are driven by enrollees with HCCs.\88\ That is, partial-year
enrollees with HCCs had higher per member, per month (PMPM)
expenditures on average as compared to full-year enrollees with HCCs,
and partial-year enrollees without HCCs were not significantly
different in PMPM expenditures compared to full-year enrollees without
HCCs.\89\
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\86\ See 85 FR 29164 at 29188-29190.; 86 FR 24140 at 24151-
24162.; and the 2021 HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\87\ When we refer to the enrollees with and without HCCs, we
are referring to enrollees without payment HCCs.
\88\ See, for example, Chapters 1.4 and 3.2 of the 2021 HHS-
Operated Risk Adjustment Technical Paper on Possible Model Changes,
available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. Also see 85 FR at 7103-7104 and 85 FR at 78585-78586.
\89\ See Chapter 1.4 of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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Therefore, beginning with the 2023 benefit year, we are proposing
to eliminate the current monthly enrollment duration factors of up to
11 months for all enrollees in the adult models, and replace them with
new monthly enrollment duration factors of up to 6 months that would
apply only to adult enrollees with HCCs. If finalized as proposed, this
would mean there would be no enrollment duration factors for adult
enrollees without HCCs starting with the 2023 benefit year nor would
there be enrollment duration factors for adult enrollees with HCCs and
more than 6 months of enrollment.
While we considered other enrollment duration factor structures, we
are proposing to limit the enrollment duration factors to 6 months
because we found that the monthly average cost variation by number of
months enrolled is meaningfully reduced after 6 months for adult
enrollees with HCCs, and enrollment duration factors beyond 6 months
did not meaningfully improve
[[Page 604]]
prediction for the adult models. As part of our analysis of enrollment
duration factor options, we also considered adoption of enrollment
duration factors by market, but we did not find a meaningful
distinction in relative costs between markets on average once we
implemented the proposed enrollment duration factors of up to 6 months
for adult enrollees with HCCs.\90\ We also considered HCC-type
contingent enrollment duration factors. Specifically, we found that the
distribution of enrollment duration and PMPM allowed charges by
enrollment duration is similar for adults with any acute HCCs versus
adults with only chronic HCCs.\91\ We therefore determined that, on
balance, it would add unnecessary complexity to introduce enrollment
duration factors by market type or that are contingent on types of HCCs
with little benefit. Therefore, we are not proposing enrollment
duration factors for the adult models by market type or that are
contingent on types of HCCs at this time.
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\90\ See Chapter 3.3.2 of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\91\ See Chapter 3.3.3 of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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We also considered previous comments we received that expressed
concerns that certain issuers--particularly small group market issuers,
small issuers, or Medicaid issuers--may have partial-year enrollees
with HCCs that are not coded. These commenters expressed concerns that
these issuers may have difficulty obtaining diagnoses for these
enrollees, creating cases where the issuer may pay claims, and incur
costs, for services associated with a condition for the partial-year
enrollee, but the issuer's limited time with the partial-year enrollee
may not be adequate to capture the diagnosis code associated with the
HCC.\92\ \93\ In response to the 2021 RA Technical Paper, we got
further comment from stakeholders who questioned whether the HCC-
contingent enrollment duration factors would have negative impacts on
small group market issuers that offer non-calendar year coverage and
take on new business later in the year. As we noted in the 2021 RA
Technical Paper, our analysis did not find evidence that issuers are
unable to capture cost-meaningful HCCs for partial-year enrollees in
the individual or small group (including merged) market.\94\
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\92\ See Chapter 3.4 of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\93\ This issue differs from situations where issuers may not
have a complete diagnostic profile for a partial-year enrollee
because the services received were not related to the diagnoses that
were not captured. For example, if an enrollee received services due
to a condition while enrolled with a different issuer, then the
current issuer may not have all diagnosis codes for a partial-year
enrollee. However, such cases do not have cost implications for the
current issuer since the partial-year enrollee received no services
associated with that diagnosis.
\94\ See Chapter 3.4 of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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We solicit comments on the proposed changes to the enrollment
duration factors for the adult models. We also solicit comments
regarding whether we should implement the proposed changes to
enrollment duration factors alone, independent of the other proposed
model specification changes outlined in this rule, beginning with the
2023 benefit year; whether we should implement the proposed changes to
enrollment duration factors in conjunction with these other proposals;
or whether we should not implement the proposed changes to enrollment
duration factors at all and maintain the current structure for these
factors.
iv. Combined Impact of the Proposed Model Changes
In sum, we are proposing to modify the HHS risk adjustment model
specifications for the adult and child models beginning with the 2023
benefit year by combining a two-stage weighted approach with the
removal of the current adult model severe illness interaction factors
and the addition of new severe illness and transplant interacted HCC
count factors to the adult and child models. We are also proposing to
replace the current enrollment duration factors in the adult models.
For the two-stage weighted approach, we propose calibrating the adult
and child models in two stages. The first stage of the weighted
estimation method would involve a linear regression of simulated plan
liability on age-sex factors and payment HCC factors for the adult and
child models, with the addition of RXCs and the new proposed enrollment
duration factors for the adult models. The second stage would use the
reciprocal of prediction from the first step to weight a second stage
linear regression. To stabilize the weights from the first stage
predictions, we propose lower and upper bound caps on the predictions
used as weights at the 2.5th and 97.5th percentiles in the adult models
and the 2.5th and 99.5th percentiles in the child models. This two-
stage weighted approach would be combined with the new severity and
transplant indicators from the interacted HCC count factors. For the
severity indicator group, we propose to add separate count factors for
one to 10+ payment HCCs (1, 2, . . . , 10+) for the adult models and
one to 5, 6 or 7, and 8+ payment HCCs (1, 2, . . . 5, 6 or 7, 8+) for
the child models. The proposed HCCs that would flag the severity
indicator are listed in Table 3. For the transplant HCCs, we propose to
incorporate factors for 4 to 8+ payment HCCs (4, 5, 6, 7, 8+) for the
adult models and one factor for 4+ payment HCCs for the child models.
The proposed HCCs that would flag the transplant indicator are listed
in Table 3. The severity- (and transplant-) HCC-count-interaction
factors would be included in both stages of the regressions. We propose
to incorporate the two-stage weighted approach and the interacted HCC
count specification updates beginning with the 2023 benefit year HHS
risk adjustment adult and child models. We also propose to remove the
current severity illness factors in the adult models beginning with the
2023 benefit year. Lastly, we propose to remove the current 11
enrollment duration factors for all enrollees in the adult models and
replace them with new monthly enrollment duration factors of up to 6
months that only apply to enrollees with HCCs. We propose to
incorporate the new HCC-contingent enrollment duration factors
beginning with the 2023 benefit year adult models.
We tested combining these model specifications into an approach
that incorporated the two-stage weighted approach, the severity and
transplant factors interacted with HCC count factors, and the HCC-
contingent enrollment duration factors. We found that, together, these
changes are expected to improve model performance in comparison to the
current models. Our analysis found this combined approach generally
improved prediction for enrollees at both the low and high ends of
expected expenditures and had higher R-squared statistics across metal
levels than the current models, indicating a better individual-level
fit.\95\ Our analysis also found general improvement in PRs for the
models with the combined proposed model specification changes across
each decile of predicted plan liability, by age-sex factor for adult
enrollees with and without HCCs, and by enrollment
[[Page 605]]
length.\96\ We also found that the mean absolute error did not
materially differ between the current adult and child models and the
proposed adult and child models with the combined proposed model
specification changes incorporated.\97\ These observations support our
belief that the best way to comprehensively improve the predictive
accuracy of the current models across the risk spectrum is to implement
all three proposed model specification changes together. To further
assist issuers and other stakeholders with analyzing the impact of the
combination of these proposed model specification changes, HHS also
conducted a transfer simulation and provided summary-level and issuer-
specific risk score and transfer estimates.\98\ \99\
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\95\ See Chapter 5.1 of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\96\ Ibid.
\97\ Ibid.
\98\ See the 2021 HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf. See also the HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes: Summary
Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
Issuers that participated in the simulation also received detailed
issuer-specific data, including risk score and transfer estimates
for the simulated results.
\99\ If an issuer wishes to use the simulation results to assist
in assessing the impact of these model specification changes on
future benefit year transfer amounts, it should do so with caution
and in combination with other significant data.
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As detailed in the 2021 RA Technical Paper, this transfer
simulation applied the proposed model specification changes to 2020
benefit year EDGE data to illustrate and estimate what 2020 benefit
year risk adjustment transfers would have been if the combined model
specification changes were applied.\100\ The transfer simulation
provided issuers with detailed, plan-level simulated results.\101\ The
coefficients values presented in Tables 1 and 2 incorporate the
combination of these proposed model specification changes and Table 3
provides the list of the proposed severity and transplant HCCs that
would apply for the proposed interacted HCC counts factors. We seek
comment on the combination of these proposed model changes and the
adoption of these changes beginning with the 2023 benefit year.
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\100\ See Chapter 5.2 of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\101\ See the HHS-Operated Risk Adjustment Technical Paper on
Possible Model Changes: Summary Results for Transfer Simulations,
available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
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We seek comment on finalizing each of these proposed model
specification changes as a whole, in part, or in combination or for
example, whether we should finalize the proposed interaction HCC counts
model specification and the proposed changes to the adult model
enrollment duration factors without the proposed two stage weighted
model specification. Finally, we seek comment on finalizing the 2023
models without the proposed model specification changes, but with
updates to the data years used for recalibration, (that is, to use
2017, 2018, and 2019 enrollee-level EDGE data, as detailed elsewhere in
this proposed rule); or, alternatively, using the updated final 2022
risk adjustment model coefficients \102\ for the 2023 benefit year risk
adjustment models, trended forward to project 2023 costs or not trended
forward to project 2023 costs.
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\102\ See ``Final 2021 Benefit Year Final HHS Risk Adjustment
Model Coefficients.'' May 12, 2020. Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf.
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c. Pricing Adjustment for the Hepatitis C Drugs
For the 2023 benefit year, we propose to continue applying a market
pricing adjustment to the plan liability associated with Hepatitis C
drugs in the risk adjustment models.\103\ Since the 2020 benefit year
risk adjustment models, we have been making a market pricing adjustment
to the plan liability associated with Hepatitis C drugs to reflect
future market pricing prior to solving for coefficients for the
models.\104\ This market pricing adjustment has been necessary to
account for the significant pricing changes associated with the
introduction of new and generic Hepatitis C drugs between the data
years used for recalibrating the models and the applicable
recalibration benefit year. We also continue to be cognizant that
issuers might seek to influence provider prescribing patterns if a drug
claim can trigger a large increase in an enrollee's risk score that is
higher than the actual plan liability of the drug claim, and therefore,
make the transfer results more favorable for the issuer. We have
committed to reassessing this pricing adjustment with additional years
of enrollee-level EDGE data, as data become available. As part of the
2023 benefit year model recalibration, we reassessed the Hepatitis C
RXC using available enrollee-level EDGE data (including 2019 benefit
year data) to consider whether the adjustment was still needed and if
it is still needed, whether it should be modified. We found that the
data for the Hepatitis C RXC that would be used for the 2023 benefit
year recalibration (that is, the 2017, 2018, and 2019 enrollee-level
EDGE data) still do not account for the significant pricing changes due
to the introduction of new Hepatitis C drugs and, therefore, do not
precisely reflect the average cost of Hepatitis C treatments applicable
to the benefit year in question.
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\103\ See, for example, 84 FR 17463 through 17466.
\104\ The Hepatitis C drugs market pricing adjustment to plan
liability is applied for all enrollees taking Hepatitis C drugs in
the data used for recalibration.
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Specifically, we are proposing to recalibrate the 2023 benefit year
risk adjustment models with the 2017, 2018, and 2019 enrollee-level
EDGE data. Generic Hepatitis C drugs did not become available on the
market until 2019.\105\ Due to the lag between the data years used to
recalibrate the risk adjustment models and the applicable benefit year
of risk adjustment, we do not believe that the data used for
recalibrating the models precisely reflect the average cost of
Hepatitis C treatments expected in the 2023 benefit year. Therefore, we
continue to believe a market pricing adjustment for the 2023 benefit
year is necessary to account for the significant pricing changes
associated with the introduction of new and generic Hepatitis C drugs
between the data years used for recalibrating the models and the
applicable recalibration benefit year. We intend to continue to assess
this pricing adjustment in future benefit year recalibrations using
additional years of enrollee-level EDGE data. We seek comment on our
proposal to continue applying a market pricing adjustment to the plan
liability associated with Hepatitis C drugs for the 2023 benefit year.
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\105\ See https://www.gilead.com/news-and-press/company-statements/authorized-generics-for-hcv. See also https://news.abbvie.com/news/abbvie-receives-us-fda-approval-mavyret-glecaprevirpibrentasvir-for-treatment-chronic-hepatitis-c-in-all-major-genotypes-gt-1-6-in-as-short-as-8-weeks.htm.
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d. Risk Adjustment RXC Mapping for Recalibration
i. Inclusion and Exclusion Criteria for Drugs in RXC Mapping and
Recalibration
This section provides an overview of the inclusion and exclusion
criteria HHS uses to identify drugs for mapping to RXCs in the adult
risk adjustment models, reviews what version of the RXC mapping
document HHS uses when processing the enrollee-level EDGE data for a
benefit year for recalibration of the adult risk adjustment models, and
outlines the criteria that warrant consideration for changes to the
incorporation (or
[[Page 606]]
exclusion) of particular drugs from the RXC mappings in future benefit
year recalibrations. We also propose a change to the approach for
identifying the version of the RXC mapping document HHS would use to
process a given benefit year's enrollee-level EDGE data for
recalibration of the adult risk adjustment models.
In accordance with Sec. 153.320, HHS develops and publishes the
risk adjustment methodology applicable in states where HHS operates the
program, including the draft factors to be employed in the models for
the benefit year. This includes the annual recalibration of the adult
risk adjustment models' RXC coefficients using data from the applicable
prior benefit years trended forwarded to reflect the applicable benefit
year of risk adjustment. Drugs that appear on claims data, either
through National Drug Codes (NDCs) or Healthcare Common Procedural
Coding System (HCPCS), are cross walked to RxNorm Concept Unique
Identifiers (RXCUIs).\106\ RXCUI mappings are always matched to the
NDCs and HCPCS applicable to the particular EDGE data year as the NDC
and HCPCS reflect the drugs that were available in the market during
the benefit year.\107\ Currently, we use the most recent RXC mappings
(RXCUIs that map to RXCs) that are available when we first process the
enrollee-level EDGE data for a benefit year for recalibration of the
adult risk adjustment models. For example, for the 2022 benefit year,
we recalibrated the adult risk adjustment models using 2016, 2017, and
2018 enrollee-level EDGE data and applied the second quarter (Q2) 2018
RXC mapping document for both 2016 and 2017,\108\ and applied the Q2
2019 mapping document for 2018 for recalibration of the adult risk
adjustment models RXC factors.\109\
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\106\ See, for example, 81 FR at 94074-94080.
\107\ See, for example, Creation of the 2018 Benefit Year HHS-
Operated Risk Adjustment Models Draft Prescription Drug (RXCUIs) to
HHS Drug Classes (RXCs) Crosswalk Memorandum at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
\108\ RXCs were not added to the risk adjustment models until
2018 benefit year; therefore, we used 2018 RXC mappings for both
2016 and 2017 enrollee-level EDGE data as there were no 2016 and
2017 RXC mapping documents. Note that, even though 2018 RXC mappings
were applied to these earlier years, they were cross walked to the
NDCs and HCPCS that describe the applicable drugs during those
earlier years.
\109\ Although the recalibration proposals are typically
released towards the end of the calendar year, we generally receive
the prior benefit year enrollee-level EDGE data in the summer or
fall, at which point we apply the most recently available mapping
document as we begin to prepare the data to recalibrate the models
for the applicable benefit year. This is why, for example, we used
the 2019 Q2 mapping document when processing the 2018 enrollee-level
EDGE data for recalibration of the 2022 benefit year adult models.
---------------------------------------------------------------------------
As noted in the 2022 Payment Notice, we also continuously assess
the availability of drugs in the market and the associated mapping of
those drugs to RXCs in the adult risk adjustment models.\110\ More
specifically, during a benefit year, HHS conducts quarterly reviews of
RXCUIs that map to RXCs in the adult risk adjustment models for that
benefit year. During our annual review of enrollee-level EDGE data for
recalibration purposes, and to a certain extent during quarterly
reviews of RXCUIs that map to RXCs in the adult risk adjustment models,
HHS evaluates the inclusion and exclusion of RXCUIs based on criteria
such as: (1) Whether costs for an individual drug are comparable to the
costs of other drugs in the same class, (2) whether a drug is a good
predictor of the presence of the diseases that map to the HCCs that an
RXC indicates (which can be evaluated through clinical expert review in
the absence of data), (3) whether clinical expert reviews of the
pharmacological properties and prescribing patterns are consistent with
treatment of a particular condition, and (4) stakeholder feedback.\111\
As a result of this on-going assessment, we may make quarterly updates
to the RXC Crosswalk, which identifies the list of NDCs and HCPCS
indicating the presence of an RXC in the current benefit year DIY and
EDGE reference data, to ensure drugs are mapped to RXCs, where
appropriate. This can include the addition or removal of drugs based on
market availability and the other criteria identified above. As such,
the risk adjustment mapping of RXCUIs to RXCs, along with the list of
NDCs and HCPCS that crosswalk to each RXCUI, may be updated throughout
a particular benefit year of risk adjustment. HHS provides information
to issuers on these updates through the DIY software, which is
published on the CCIIO website,\112\ as well as through the EDGE global
reference updates, which are published on the Distributed Data
Collection program page on the Registration for Technical Assistance
Portal (REGTAP).\113\
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\110\ See 86 FR at 26164.
\111\ See, for example, the Creation of the 2018 Benefit Year
HHS-Operated Risk Adjustment Adult Models Draft Prescription Drug
(RXCUIs) to HHS Drug Classes (RXCs) Crosswalk (September 17, 2017),
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Draft-RxC-Crosswalk-Memo-9-18-17.pdf.
\112\ The August 3, 2021 version of the DIY software is
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
\113\ Available at https://www.regtap.info/reg_library.php?libfilter_topic=3.
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This ongoing updating process occurs on a different timeline than
the annual model recalibration activities for a given benefit year.
In this rule, we propose to change the approach for identifying the
version of the RXC mapping document HHS would use to process a given
benefit year's enrollee-level EDGE data for the annual recalibration of
the adult risk adjustment models. More specifically, we propose to
recalibrate the adult risk adjustment models using the final, fourth
quarter (Q4) RXC mapping document that was applicable for each benefit
year of data that is included in the applicable benefit year's model
recalibration, while continuing to engage in annual and quarterly
review processes using the inclusion and exclusion criteria described
above. For example, if we recalibrate the 2024 benefit year adult risk
adjustment models using 2018, 2019, and 2020 benefit years of enrollee-
level EDGE data, we would use the Q4 RXC mapping document for each of
those benefit years (that is, Q4 2018, Q4 2019, and Q4 2020,
respectively) for recalibration purposes. We would also use the
criteria described above to evaluate the inclusion and exclusion of
RXCUIs and may make other updates to the 2024 benefit year RXC
Crosswalk to ensure drugs are mapped to RXCs, where appropriate.
We propose to begin to use this approach for recalibration of the
2023 adult risk adjustment models with the exception of the 2017
enrollee-level EDGE data year, for which we propose to use the most
recent RXC mapping document that was available when we first processed
the 2017 enrollee-level EDGE data (that is, Q2 2018). We propose to use
the applicable benefit year's Q4 RXC mapping documents for both the
2018 and 2019 benefit years of enrollee-level EDGE data for the
recalibration of the adult risk adjustment models for the 2023 benefit
year. Under this proposal, we would hold those mappings constant when
using the 2018 and 2019 enrollee level EDGE data years in future
benefit year model recalibrations--meaning that we would use the
applicable benefit year's Q4 RXC mapping documents when the 2018 or
2019 benefit year of enrollee-level EDGE data is used for future
benefit year model recalibrations.\114\
[[Page 607]]
The purpose of maintaining a specific version of the same RXC mapping
document for future recalibrations under this proposal is to limit the
volatility of some coefficients from year-to-year and to ensure that we
are capturing the utilization and costs observed for the underlying
drugs in use in that year for the condition. Because the final DIY
software update contains the Q4 list, this approach would also have the
added benefit of providing issuers the opportunity to see the mappings/
crosswalk that will be applied to that data year in the final DIY
software release before it is used for recalibration.
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\114\ Consistent with the approach finalized in the 2022 Payment
Notice, the 2018 and 2019 enrollee-level EDGE data would be used for
the recalibration of the 2024 benefit year models and the 2019
enrollee-level EDGE data would be used for the recalibration of the
2025 benefit year models. See, supra, note 47.
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For purposes of the 2023 benefit year recalibration, we are
proposing an exception for the 2017 benefit year enrollee-level EDGE
data and would instead use the most recent RXC mapping document that
was available when we first processed the benefit year's enrollee-level
EDGE data for recalibration purposes (that is, Q2 2018). We are
proposing this approach for the 2017 benefit year enrollee-level EDGE
data because we did not include RXCs in the adult risk adjustment
models until 2018 \115\ and therefore, we do not have a Q4 RXC mapping
for the 2017 benefit year. Thus, we propose to use the Q2 2018 RXC
mapping document for the 2017 benefit year enrollee-level EDGE data
year for 2023 model recalibration, consistent with the mapping used for
processing the 2017 data for recalibration of the 2021 and 2022 adult
models. We seek comment on this proposal to change the approach for
identifying the version of the RXC mapping document that would be used
to process a given benefit year's data for the annual recalibration of
the adult models, as well as the proposed applicability beginning with
the 2023 benefit year model recalibration and the proposed exception
for the mapping document for the 2017 benefit year enrollee-level EDGE
data.
---------------------------------------------------------------------------
\115\ See 81 FR at 94075.
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Alternatively, we seek comment on whether we should take a
different approach to recalibration of the RXC mappings for the adult
risk adjustment models. Under this alternative, we would use the latest
RXC mapping document available at the time that we recalibrate the
adult risk adjustment models and apply it to all three underlying EDGE
data years used to recalibrate the models for the benefit year. This
alternative is in contrast to the current approach of using the most
recent RXC mappings (RXCUIs that map to RXCs) that are available when
we first process the enrollee-level EDGE data for recalibration of the
applicable benefit year's adult models and the above proposed approach
to use the final Q4 RXC mappings that was applicable for each benefit
year of data included in the applicable benefit year's model
recalibration. More specifically, under this alternative approach, we
would instead use the most recent RXCUI to RXC mapping document
available at the time of developing a benefit year's proposed model
factors for publication in the applicable benefit year's Payment
Notice. As the recalibration process typically begins several months
prior to the proposed Payment Notice being released, the most recently
available RXCUI to RXC mapping document available at the time of
developing a benefit year's proposed model factors would generally be
either the Q4 mapping from the prior benefit year (for 2023 benefit
year (BY) model recalibration that would have been the Q4 mapping for
BY 2020), or the Q1 or Q2 mapping document from the year in which
recalibration is occurring (for 2023 benefit year model recalibration
that would have been the Q1 or Q2 mapping for BY 2021). Under this
approach, the RXCUI to RXC mappings applied to the underlying data
years used in model recalibration would be updated each year of model
recalibration to reflect the most recently available decisions in the
quarterly mapping document about which RXCUIs map to RXCs in the adult
models. While this approach would represent what is most likely to map
to the RXCs in the upcoming benefit year of risk adjustment, the RXC
mapping document used would still lag behind what the RXC mapping
document will be in the applicable benefit year due to the inherent
time lag between when recalibration occurs for a benefit year and the
actual benefit year.\116\ Also, while we believe that the impact will
likely be minimal, this approach to remapping the RXCs every year may
contribute to volatility of some coefficients, as the RXC mappings for
the underlying data years would be updated each year during the annual
model recalibration. Another drawback of this approach is that the most
recent RXC mappings will be reflective of similarly recent costs,
clinical relevancies, and prescribing patterns. If changes to any of
these have occurred between an earlier data year and the most recent
year, RXC mappings reflecting the latter will generally be applied to
the former.\117\ We seek comment on all aspects of this alternative
approach.
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\116\ For example, the current recalibration activities (in
calendar year 2021) relate to the 2023 benefit year risk adjustment
models.
\117\ As noted elsewhere in this rule, in certain circumstances,
HHS may consider changes to the RXCUIs from the applicable data year
crosswalk as part of future benefit year model recalibration and
quarterly review processes.
---------------------------------------------------------------------------
ii. Targeted Changes to RXC Mappings for Recalibration
Regardless of the version of the RXC mapping document we use during
the annual adult risk adjustment model recalibration, there may be a
relatively small number of drugs that still require additional analysis
and consideration given the changes that can occur in the market
between the data year and the applicable benefit year of risk
adjustment. The targeted changes to particular drugs' mappings would
typically occur when performing recalibration for future benefit years.
Based on our experience since the incorporation of RXCs into risk
adjustment models in the 2018 benefit year, we do not believe that the
removal or addition of an RXCUI from the RXC mappings (and the
associated removal of the NDCs and HCPCS associated with that RXCUI)
are typically material to recalibration because most drug removals are
not associated with utilization and cost levels that would have a
meaningful impact on model coefficients.\118\ However, in extenuating
circumstances where HHS believes there will be a significant impact
from a change in an RXCUI to RXC mapping, such as: (1) Evidence of
significant off-label prescribing (as was the case with
hydroxychloroquine sulfate \119\); (2) abnormally large changes in
clinical indications or practice patterns associated with drug usage;
or (3) certain situations in which the cost of a drug (or biosimilars)
become much higher or lower than the typical cost of drugs in the same
prescription drug category, HHS will consider whether changes to the
RXCUI to RXC mapping from the applicable data year crosswalk are needed
for future benefit year recalibrations. In the following sections of
this proposed rule, we illustrate cases where we believe extenuating
[[Page 608]]
circumstances existed and our evaluation of whether to make targeted
changes to the mapping of select RXCUIs to RXCs due to those
extenuating circumstances as part of the annual recalibration process
for the 2023 benefit year adult models. In particular, we consider the
cases of RXCUI to RXC mapping of Descovy[supreg] and hydroxychloroquine
sulfate. We also note that, as discussed above, HHS may make other
exception-based adjustments during the recalibration process to reflect
changes in clinical practice and prescribing between recalibration and
the benefit year, such as the adjustment for Hepatitis C drugs, where
HHS determines it is necessary and appropriate to do so. We are not
proposing changes to this approach or the criteria used for these
reviews, but are sharing these examples to further promote transparency
about the process for targeted changes to mapping of select RXCUI to
RXCs.\120\
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\118\ For example, the average effect of the removal of a single
therapeutic drug ingredient in the 2019 Drug Removal Review on 2020
Q1 was an approximate decrease of 0.14% percent in total pharmacy
claims spending among RXC drugs, and the average effect of the
removal of a single non-hydroxychloroquine therapeutic drug
ingredient in the 2020 Drug Removal Review on 2021 Q1 was an
approximate decrease of 0.68 percent in total pharmacy claims
spending among RXC drugs.
\119\ See, for example, 86 FR at 24180.
\120\ As noted above, HHS also conducts quarterly reviews of
RXCUIs that map to RXCs in the adult models and may make targeted
changes to RXC mappings during a benefit year as a result of these
reviews. We are not proposing any changes to the quarterly update
process or the criteria used for such reviews.
---------------------------------------------------------------------------
(a) Descovy[supreg]
Descovy[supreg] has been included in RXC 01 (Anti-HIV Agents) since
RXCs were initially added to the adult risk adjustment models for the
2018 benefit year because it met the inclusion criteria of being a
reliable predictor of the presence of HIV and being representative of
the costs of other drugs associated with the treatment of HIV. However,
in October 2019, Descovy[supreg] was approved by the Food and Drug
Administration (FDA) for pre-exposure prophylaxis (PrEP).\121\ As noted
in the 2022 Payment Notice, HHS removed Descovy[supreg] from the Q4
2020 RXCUI to RXC mappings for consistency with the treatment of other
PrEP drugs.122 123 The 2023 benefit year model
recalibration, however, is the first benefit year recalibration that
will use the 2019 benefit year enrollee-level EDGE data. HHS therefore
considered removal of Descovy[supreg] from the RXC mappings applied to
the 2019 benefit year enrollee-level EDGE data year. The reason for
this consideration was that some enrollees in 2019 would have used
Descovy[supreg] for PrEP, which would have an impact on the
recalibration of the coefficients for RXC 01 (Anti-HIV Agents) and was
in keeping with the previously mentioned criteria of changes in
clinical indications or practice patterns associated with drug usage
for further evaluation for potential exception. However, our internal
analysis of available enrollee-level EDGE data indicated that most
Descovy[supreg] users in 2019 were using the drug as part of active HIV
treatment, rather than PrEP.\124\ This, supported by the fact that
Descovy[supreg] was approved for PrEP late in the calendar year of
2019, suggested that the benefits of keeping Descovy[supreg] mapped to
RXC 01 (Anti-HIV Agents) outweighed the tradeoffs of removing it.\125\
Similarly, the 2019 approval and subsequent change in Descovy[supreg]
use that triggered its removal from the crosswalk in Q4 BY 2020 was not
applicable to its use in 2017 or 2018 when it was not approved PrEP.
Therefore, we are not proposing to make an exception to the RXCUI to
RXC mappings to remove Descovy[supreg] from mapping to RXC 01 in 2017,
2018 and 2019 benefit year enrollee-level EDGE datasets used for the
2023 benefit year recalibration of the adult models. We further note
that, regardless of the mapping approach adopted for Descovy[supreg],
enrollees in risk adjustment covered plans that use Descovy[supreg] (or
other PrEP drugs) in combination with another HIV treatment drug that
maps to RXC 01 would still receive credit for RXC 01 in the 2023
benefit year of risk adjustment. If we adopt the alternative mapping
approach of using the latest RXC mapping document available at the time
that we recalibrate adult risk adjustment models and apply it to all
three underlying EDGE data years used to recalibrate the models for the
benefit year, Descovy[supreg] would not map to RXC 01 and we would have
to make an exception to include it in the mapping. We seek comment on
whether we should make such an exception to include and map
Descovy[supreg] to RXC 01 in the datasets used to recalibrate the 2023
benefit year adult models, should the alternative approach be
finalized.
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\121\ See https://www.fda.gov/news-events/press-announcements/fda-approves-second-drug-prevent-hiv-infection-part-ongoing-efforts-end-hiv-epidemic.
\122\ See 86 FR at 24164. Also see HHS-Developed Risk Adjustment
Model Algorithm ``Do It Yourself (DIY)'' Software Instructions for
the 2020 Benefit Year (April 15, 2021 Update), available at https://www.cms.gov/files/document/cy2020-diy-instructions04132021.pdf.
\123\ We further explained that enrollees that use
Descovy[supreg] (or other PrEP drugs) in combination with other HIV
treatment drugs would still receive credit for RXC 01. See 86 FR at
24164.
\124\ Assessing the use of Descovy[supreg] for PrEP involved
identifying instances of the use of Descovy[supreg] without an
accompanying HIV diagnosis (as defined by the presence of HCC01) or
use of any other anti-HIV agent (as defined by the use of any drug
in RXC01 other than Descovy[supreg]). The reason the latter helps to
identify non-PrEP Descovy[supreg] use is because Descovy[supreg] for
active HIV-1 treatment is required to be co-administered with other
anti-HIV agents.
\125\ Consistent with the approach outlined in this rule,
Descovy[supreg] was mapped to RXC 01 in the Q4 2019 RXC mapping
applied to enrollee-level EDGE data that was used to develop the
proposed 2023 benefit year factors for the adult models in this
rule. If the alternative approach to RXC mapping is adopted, such
that the Q4 2020 RXC mapping is applied for the 2023 benefit year
recalibration of the adult models, Descovy[supreg] would not map to
RXC 01 unless an exception is made.
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(b) Hydroxychloroquine Sulfate
Hydroxychloroquine sulfate was initially mapped to RXC 09 (Immune
Suppressants and Immunomodulators) in the Q3 BY 2018 review because it
was believed to be a reliable predictor of the presence of conditions
associated with RXC 09. However, HHS removed the RXCU for
hydroxychloroquine sulfate from mapping to RXC 09 (Immune Suppressants
and Immunomodulators) in the Q4 BY 2020 RXC mappings because of
concerns regarding unrepresentative expenditures and off-label
prescribing during the COVID-19 PHE.\126\ This meant that beginning
with the 2020 benefit year of risk adjustment, hydroxychloroquine
sulfate no longer mapped to RXC 09.
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\126\ 85 FR at 24180. Also see the HHS-Developed Risk Adjustment
Model Algorithm ``Do It Yourself (DIY)'' Software Instructions for
the 2020 Benefit Year, April 15, 2021 Update, available at https://www.cms.gov/files/document/cy2020-diy-instructions04132021.pdf.
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Then, in part 2 of the 2022 Payment Notice final rule, we finalized
proposals for the 2022 benefit year model recalibration, including the
targeted removal of hydroxychloroquine sulfate for recalibration of the
adult models.\127\ As we explained, our analysis of pre-2020 data
showed that the cost of hydroxychloroquine sulfate drugs were much
lower than the costs of other drugs taken by enrollees assigned RXC
09.\128\ However, even though hydroxychloroquine sulfate was no longer
mapping to the RXC 09 in the Q4 2020 DIY software, hydroxychloroquine
sulfate was still mapping to RXC 09 in the 2018 enrollee-level EDGE
data that would be used for the 2022 benefit year model
recalibration.\129\ Additionally, after hydroxychloroquine sulfate was
removed from mapping to RXC 09 in the
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\127\ 86 FR at 24180.
\128\ 86 FR at 24180.
\129\ The same concern was not present for the 2016 or 2017
enrollee-level EDGE datasets used for the 2022 benefit year model
recalibration because hydroxychloroquine sulfate was not mapped to
RXC 09 until the Q3 2018 crosswalk.
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[[Page 609]]
Q4 2020 RXC mapping, stakeholders expressed concern about the impact on
the coefficients for RXC 09, and associated interaction terms, of
including hydroxychloroquine sulfate in RXC mapping for recalibration
given that these drugs were such low-cost. After consideration of these
issues, HHS determined that hydroxychloroquine sulfate met the criteria
of significant off-label prescribing, changes in clinical practice
patterns associated with drug usage, and the cost of the drug being
much lower than the typical cost of drugs in the same prescription drug
category that warrants further consideration of whether an exception is
appropriate. After determining that hydroxychloroquine sulfate met
those criteria and considering the feedback from stakeholders, HHS made
the determination that it should be removed. Therefore, to effectuate
the targeted removal of hydroxychloroquine sulfate for the
recalibration of the 2022 benefit year adult risk adjustment models, we
only used 2016 and 2017 enrollee-level EDGE data, where
hydroxychloroquine sulfate was not mapped to RXC 09, for the limited
purpose of developing the coefficients for RXC 09 (Immune Suppressants
and Immunomodulators) and the related RXC 09 interactions (RXC 09 x
HCC056 or 057 and 048 or 041; RXC 09 x HCC056; RXC 09 x HCC057; RXC 09
x HCC048, 041).\130\
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\130\ 86 FR at 24180.
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Our consideration of the targeted removal of select drugs from RXC
mappings for purposes of the 2023 benefit year model recalibration
similarly identified hydroxychloroquine sulfate as a drug for further
consideration. It continues to meet the criteria of significant off-
label prescribing, changes in clinical practice patterns associated
with drug usage, and the cost of the drug being much lower than the
typical cost of drugs in the same prescription drug category. However,
unlike the 2022 benefit year model recalibration, the 2023 benefit year
updates involve two years of enrollee-level EDGE data (2018 and 2019
data years) where the inclusion of hydroxychloroquine sulfate could
impact the annual model recalibration updates to the coefficients and
associated interaction terms for RXC 09. Therefore, we determined that
the targeted removal of this drug from mapping to RXC 09 was again
appropriate, but to effectuate the targeted removal of this drug for
purposes of the 2023 benefit year recalibration of the adult models, we
would adopt a different approach than 2022 risk adjustment model
recalibration and would remove the RXCUI to RXC mapping in the 2018 and
2019 enrollee-level EDGE data for hydroxychloroquine sulfate to RXC 09
(Immune Suppressants and Immunomodulators) and the related RXC 09
interactions (RXC 09 x HCC056 or 057 and 048 or 041; RXC 09 x HCC056;
RXC 09 x HCC 057; RXC 09 x HCC048, 041). We would adopt a similar
approach for any future year that uses the enrollee-level EDGE data for
the 2018 and 2019 benefit years for purposes of the annual model
recalibration.\131\ We note that the same concern was not present for
the 2017 benefit year enrollee-level EDGE data--the other benefit year
of data that will be used for the 2023 benefit year model
recalibration--because hydroxychloroquine was not included in the RXC
crosswalk until the 2018 benefit year.
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\131\ Consistent with the approach finalized in the 2022 Payment
Notice, the 2018 and 2019 benefit year enrollee-level EDGE datasets
would continue to be used for recalibration of the 2024 benefit year
models; and the 2019 benefit year enrollee-level EDGE dataset would
also be used for recalibration of the 2025 benefit year models.
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We seek comment on these proposals.
e. List of Factors To Be Employed in the Risk Adjustment Models
The proposed 2023 benefit year risk adjustment model factors
resulting from the equally weighted (averaged) blended factors from
separately solved models using the 2017, 2018, and 2019 enrollee-level
EDGE data, including all of the model specification changes and
recalibration proposals detailed above, are shown in Tables 1 through
6. The adult, child, and infant models have been truncated to account
for the high-cost risk pool payment parameters by removing 60 percent
of costs above the $1 million threshold.\132\ Table 1 contains factor
coefficients for each adult model, including the age-sex, HCCs, RXCs,
RXC-HCC interactions, interacted HCC counts, and enrollment duration
coefficients. Table 2 contains the factor coefficients for each child
model, including the age-sex, HCCs, and interacted HCC counts
coefficients. Table 3 lists the proposed HHS-HCCs that have been
selected for the proposed interacted HCC counts factors that would
apply to the adult and child models. Table 4 contains the factors for
each infant model. Tables 5 and 6 contain the HCCs included in the
infant models' maturity and severity categories, respectively.
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\132\ We are not proposing changes to the high-cost risk pool
parameters for the 2023 benefit year. Therefore, we would maintain
the $1 million threshold and 60 percent coinsurance rate.
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f. Cost-Sharing Reduction Adjustments
We propose to continue including an adjustment for the receipt of
CSRs in the risk adjustment models in all 50 states and the District of
Columbia. While we continue to study and explore ways to update the CSR
adjustments to improve prediction for CSR enrollees,\136\ for the 2023
benefit year, to maintain stability and certainty for issuers, we are
proposing to maintain the CSR adjustment factors finalized in the 2019,
2020, 2021, and 2022 Payment Notices.\137\ See Table 7. We also propose
to continue to use a CSR adjustment factor of 1.12 for all
Massachusetts wrap-around plans in the risk adjustment plan liability
risk score calculation, as all of Massachusetts' cost-sharing plan
variations have AVs above 94 percent.\138\ We seek comment on these
proposals.
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\136\ See Appendix A of the 2021 HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\137\ See 83 FR 16930 at 16953; 84 FR 17454 at 17478 through
17479; 85 FR 29164 at 29190; and 86 FR 24140 at 24181.
\138\ See 81 FR 12203 at 12228.
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[[Page 624]]
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g. Model Performance Statistics
Each benefit year, to evaluate risk adjustment model performance,
we examine each model's R-squared statistic and PRs. The R-squared
statistic, which calculates the percentage of individual variation
explained by a model, measures the predictive accuracy of the model
overall. The PR for each of the HHS risk adjustment models is the ratio
of the weighted mean predicted plan liability for the model sample
population to the weighted mean actual plan liability for the model
sample population. The PR represents how well the model does on average
at predicting plan liability for that subpopulation.
A subpopulation that is predicted perfectly would have a PR of 1.0.
For each of the current and proposed HHS risk adjustment models, the R-
squared statistic and the PRs are in the range of published estimates
for concurrent risk adjustment models.\139\ As detailed in the 2021 RA
Technical Paper, the proposed model specification updates, when taken
together, generally demonstrate improvements in R-squared as well as
PRs.\140\ Because we propose to blend the coefficients from separately
solved models based on the 2017, 2018, and 2019 benefit years'
enrollee-level EDGE data, we are publishing the R-squared statistic for
each model separately to verify their statistical validity. The R-
squared statistics for the proposed 2023 benefit models are shown in
Table 8.
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\139\ Hileman, Geof and Spenser Steele. ``Accuracy of Claims-
Based Risk Scoring Models.'' Society of Actuaries. October 2016.
\140\ See, for example, Chapter 5.1 in the 2021 HHS-Operated
Risk Adjustment Technical Paper on Possible Model Changes, available
at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
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[[Page 625]]
BILLING CODE 4120-01-C
3. Overview of the HHS Risk Adjustment Methodology (Sec. 153.320)
In part 2 of the 2022 Payment Notice final rule, we finalized the
proposal to continue to use the state payment transfer formula
finalized in the 2021 Payment Notice for the 2022 benefit year and
beyond, unless changed through notice-and-comment rulemaking.\141\ We
explained that under this approach, we will no longer republish these
formulas in future annual HHS notice of benefit and payment parameter
rules unless changes are being proposed. We are not proposing any
changes to the formula in this rule and therefore are not republishing
the formulas in this rule. We would continue to apply the formula as
finalized in the 2021 Payment Notice in the states where HHS operates
the risk adjustment program in the 2023 benefit year.\142\
Additionally, as finalized in the 2020 Payment Notice, we will maintain
the high-cost risk pool parameters for the 2020 benefit year and
beyond, unless amended through notice-and-comment rulemaking.\143\ We
are not proposing any changes to the high-cost risk pool parameters for
the 2023 benefit year; therefore, we would maintain the $1 million
threshold and 60 percent coinsurance rate.
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\141\ See 86 FR at 24183-24186.
\142\ For an illustration and further details on the state
payment transfer formula, see 86 FR at 24183-24186.
\143\ See 84 FR at 17466-17468.
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4. Risk Adjustment State Flexibility Requests (Sec. 153.320(d))
We propose to repeal the ability of states to request a reduction
in risk adjustment state transfers starting with the 2024 benefit year,
with an exception for states that have requested such reductions in
prior benefit years. We also solicit comments on requests from Alabama
to reduce risk adjustment state transfers for the 2023 benefit year in
the individual (including the catastrophic and non-catastrophic risk
pools) and small group markets. In the 2019 Payment Notice, we provided
states the flexibility to request a reduction to the applicable risk
adjustment state transfers calculated by HHS using the state payment
transfer formula for the state's individual (catastrophic or non-
catastrophic risk pools), small group, or merged markets by up to 50
percent to more precisely account for differences in actuarial risk in
the applicable state's markets.\144\ We finalized that any requests we
received would be published in the applicable benefit year's proposed
HHS notice of benefit and payment parameters, and the supporting
evidence provided by the state in support of its request would be made
available for public comment.\145\
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\144\ 83 FR 16955-16960.
\145\ If the state requests that HHS not make publicly available
certain supporting evidence and analysis because it contains trade
secrets or confidential commercial or financial information within
the meaning of the HHS Freedom of Information Act (FOIA) regulations
at 45 CFR 5.31(d), HHS will only make available on the CMS website
the supporting evidence submitted by the state that is not a trade
secret or confidential commercial or financial information by
posting a redacted version of the state's supporting evidence. See
45 CFR 153.320(d)(3).
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In accordance with Sec. 153.320(d)(2), beginning with the 2020
benefit year, states must submit such requests with the supporting
evidence and analysis outlined under Sec. 153.320(d)(1) by August 1st
of the calendar year that is 2 calendar years prior to the beginning of
the applicable benefit year. If approved by HHS, state reduction
requests will be applied to the plan PMPM payment or charge state
payment transfer amount (Ti in the state payment transfer
formula).\146\ For the 2020 and 2021 benefit years, the state of
Alabama submitted a 50 percent risk adjustment transfer reduction
request for its small group market and HHS approved both requests.\147\
For the 2022 benefit year, the state of Alabama submitted 50 percent
risk adjustment transfer reduction requests for its individual
(including catastrophic and non-catastrophic risk pools) and small
group markets, and HHS approved both requests.\148\
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\146\ For an illustration of the state payment transfer formula,
see 86 FR at 24184.
\147\ See 84 FR 17484-17485 and 85 FR 29193-29194.
\148\ See 86 FR 24187-24189.
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a. Requests To Reduce Risk Adjustment Transfers for the 2023 Benefit
Year
For the 2023 benefit year, HHS received requests from Alabama to
reduce risk adjustment state transfers for its individual and small
group markets by 50 percent.\149\ Alabama asserts that the state
payment transfer formula produces imprecise results in Alabama because
of the extremely unbalanced market share in the individual and small
group markets. Specifically, Alabama asserts that the presence of a
dominant issuer in the individual and small group markets precludes the
HHS-operated risk adjustment program from working as precisely as it
would with a more balanced distribution of market share, which Alabama
believes precludes the HHS-operated risk adjustment program from
working as precisely as it would with a more balanced distribution of
market share. The state regulators stated that their review of the
issuers' financial data suggested that any premium increase resulting
from a reduction to risk adjustment payments of 50 percent in the
individual market for the 2023 benefit year would not exceed 1 percent,
the de minimis premium increase threshold set forth in Sec.
153.320(d)(1)(iii) and (d)(4)(i)(B).
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\149\ Alabama's individual market request is for a 50 percent
reduction to risk adjustment transfers for its individual market
non-catastrophic and catastrophic risk pools.
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In the small group market request, Alabama states that its review
of the issuers' financial data from the 2020 benefit year suggests that
any premium increase resulting from a reduction to risk adjustment
payments of 50 percent in the small group market for the 2023 benefit
year would exceed the de minimis threshold. However, Alabama asserts
that HHS should consider data for years prior to 2021 to analyze its
small group market request for the 2023 benefit year because the COVID-
19 PHE renders an analysis based on 2020 data unreliable. Alabama
further notes that there is no regulatory requirement to analyze the
request using the most recent available year of data. Alabama further
states that the de minimis regulatory threshold does not work when a
small issuer receives a risk adjustment payment, and that the test
should instead be based on what percentage market share the large
issuer in Alabama holds compared to the other issuers in the market.
We seek comment on the requests to reduce risk adjustment state
transfers in the Alabama individual and small group markets by 50
percent for the 2023 benefit year. The requests and additional
documentation submitted by Alabama are posted under the ``State
Flexibility Requests'' heading at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/.
b. Repeal of Risk Adjustment State Flexibility To Request a Reduction
in Risk Adjustment State Transfers (Sec. 153.320(d))
We propose to generally repeal the flexibility for states to
request reductions of transfers calculated by HHS under the state
payment transfer formula in all state market risk pools starting with
the 2024 benefit year, with an exception for states that previously
requested a reduction in risk adjustment state transfers under Sec.
153.320(d). Section 3 of E.O. 14009 directs HHS, and the heads of all
other executive departments and agencies with authorities and
responsibilities related
[[Page 626]]
to Medicaid and the ACA, to review all existing regulations, orders,
guidance documents, policies, and any other similar agency actions to
determine whether they are inconsistent with policy priorities
described in Section 1 of E.O. 14009, to include protecting and
strengthening the ACA and making high-quality health care accessible
and affordable for all individuals.\150\ Consistent with this
directive, we have been considering whether the risk adjustment state
flexibility under Sec. 153.320(d) is inconsistent with policies
described in Sections 1 and 3 of E.O. 14009.
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\150\ E.O. 14009; 86 FR 7793 (Feb. 2, 2021).
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In prior rulemakings, we received comments stating that this policy
does not strengthen the ACA and requesting that HHS repeal this policy,
as risk adjustment state flexibility may result in risk selection,
market destabilization, increased premiums, smaller networks, and worse
plan options. Specifically, these commenters stated that reducing
transfers to plans with higher-risk enrollees could create incentives
for issuers to avoid enrolling high-risk enrollees in the future
through distorting plan offering and designs, including by avoiding
broad network plans, not offering platinum plans at all, and only
offering limited gold plans. Commenters further stated that issuers
could also distort plan designs by excluding coverage or imposing high
cost sharing for certain drugs or services. Some commenters stated that
the risk adjustment state payment transfer formula already adjusts for
differences in types of individuals enrolled in different states and
aggregate differences in prices and utilization by using the statewide
average premium as a scaling factor, so state flexibility to account
for state-specific factors is unnecessary.\151\ The commenters also
generally noted that states that believe the HHS risk adjustment
methodology does not work properly in their markets have the option, if
they operate their Exchange, to operate a state-based risk adjustment
program.
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\151\ See https://www.brookings.edu/wp-content/uploads/2020/12/FiedlerLaytonCommentLetterNBPP2022.pdf.
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Moreover, since HHS finalized the risk adjustment state flexibility
policy in the 2019 Payment Notice, there have been changes in
Administration policy priorities. This Administration's stated
priorities include protecting and strengthening the ACA, of which the
risk adjustment program is an integral part, and supporting protections
for people with pre-existing conditions; \152\ in contrast, past
Administration priorities included reducing economic burden on states
and other entities and maximizing state flexibility.\153\ Market
participation has also stabilized in recent years, with new issuers
entering the market and premiums remaining stable since 2019.\154\
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\152\ Executive Order 14009; 86 FR 7793 (Feb. 2, 2021).
\153\ Executive Order 13765; 82 FR 8351 (Jan. 24, 2017).
\154\ See, for example, the 2019, 2020, and 2021 Unified Rate
Review Public Use Files, available at https://www.cms.gov/CCIIO/Resources/Data-Resources/ratereview. See also the Summary Report on
Permanent Risk Adjustment Transfers for the 2020 Benefit Year,
available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2020.pdf. See
also the Summary Report on Permanent Risk Adjustment Transfers for
the 2019 Benefit year, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/RA-Report-BY2019.pdf.
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Following our further consideration of this policy consistent with
the instructions in the E.O., prior comments on this policy, and the
earlier described changes, as well as the general low level of interest
states have expressed in the policy, we propose, beginning for the 2024
benefit year, to repeal the ability for states to request a reduction
in risk adjustment state transfers of up to 50 percent in any state
market risk pool with an exception for states who previously requested
this flexibility in prior benefit years. We propose to effectuate this
change by amending the introductory text to Sec. 153.320(d) to reflect
that this flexibility was available from the 2020 through 2023 benefit
years for all states and to add a new second sentence to the
introductory text in Sec. 153.320(d) to capture the proposal to permit
states that previously participated to request these reductions
beginning with the 2024 benefit year.
In addition, we propose to add new Sec. 153.320(d)(5) to define
prior participants as any state that previously submitted a risk
adjustment state flexibility request for any market risk pool. We are
proposing to create an exception for states that previously
participated because there is one state, Alabama, that requested this
flexibility since 2020 (the first benefit year these requests were
permitted). Alabama has generally been able to demonstrate a de minimis
impact on the market risk pool in which the reduction in transfers was
requested, meaning any impacted issuer would not need to increase their
premiums by more than 1 percent to account for the reduction to risk
adjustment transfers. As explained in the state's requests, Alabama has
unique state characteristics, in which there is an extremely unbalanced
market share in both its individual and small group markets, with one
very dominant issuer and a few very small competitors that produces
imprecise results under the HHS risk adjustment methodology, which is
calibrated on a national dataset.\155\ We do not believe that
continuing to permit a reduction in risk adjustment transfers in this
state, given its unique characteristics, undermines the efficacy of
risk adjustment. In addition, we believe that any minimal impact on
transfers in this state is outweighed by the benefit of maintaining and
taking steps to support the state's effort to maximize participation in
its state market risk pools that have developed as a result of this
flexibility in prior years, and that might otherwise only have a single
issuer offering coverage in the absence of this flexibility.
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\155\ See Alabama requests for 2020 through 2022 under the Risk
Adjustment State Flexibility Requests heading at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs. Some of the information in these requests is redacted in
accordance with 45 CFR 153.320(d)(3). If the state requests that HHS
not make publicly available certain supporting evidence and analysis
because it contains trade secrets or confidential commercial or
financial information within the meaning of the HHS Freedom of
Information Act (FOIA) regulations at 45 CFR 5.31(d), HHS will only
make available on the CMS website the supporting evidence submitted
by the state that is not a trade secret or confidential commercial
or financial information by posting a redacted version of the
state's supporting evidence.
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We note that this proposal to retain this flexibility for prior
participants is only intended to permit such states to continue to
request risk adjustment state flexibility in benefit year 2024 and
beyond, not to automatically apply previously approved transfer
reductions to future benefit years. Under this proposal, a prior
participant will still be required to submit its request(s) to reduce
risk adjustment state transfers each year in the timeframe, form, and
manner set forth in Sec. 153.320(d)(1) and (2), and HHS will continue
to evaluate risk adjustment state flexibility requests for approval as
set forth in Sec. 153.320(d)(4). If state requests do not meet the
applicable approval criteria, HHS will not approve the requests. The
flexibility for HHS to approve a reduction amount that is lower than
the amount requested by the State in Sec. 153.320(d)(4)(ii) would also
be retained.
Finally, for reduction requests for the 2024 benefit year and
beyond, we also propose to remove the option for the state to
demonstrate the state-specific factors that warrant an adjustment to
more precisely account for relative risk differences in the state
individual catastrophic, individual non-catastrophic, small group, or
merged
[[Page 627]]
market risk pool as one of the justifications for the state's request
and one of the criteria for HHS approval. Instead, we propose to
require prior participants to meet the other existing criterion that
the requested reduction would have de minimis impact on the necessary
premium increase to cover the transfers for issuers that would receive
reduced transfer payments, as the sole justification for the state's
request and criterion for HHS approval beginning with 2024 benefit year
requests. To effectuate this change, we propose to amend paragraph
(d)(1)(iii) of Sec. 153.320 to add the phrase ``For the 2020 through
2023 benefit years'' to reflect that state requests submitted for those
benefit years must include a justification for the reduction requested
demonstrating either of the existing criteria, that is, the state-
specific factors that warrant an adjustment to more precisely account
for relative risk differences in the state individual catastrophic,
individual non-catastrophic, small group, or merged market risk pool,
or that the requested reduction would have de minimis impact on the
necessary premium increase to cover the transfers for issuers that
would receive reduced transfer payments. We also propose to add a new
Sec. 153.320(d)(1)(iv) to capture the requirement that prior
participant requests beginning with the 2024 benefit year must include
a justification demonstrating the requested reduction would have de
minimis impact on the necessary premium increase to cover the transfers
for issuers that would receive reduced transfer payments. We similarly
propose to amend the standards for HHS approval under Sec.
153.320(d)(4)(i) to create a new paragraph (d)(4)(i)(A) to capture the
existing options available for 2020 through 2023 benefit year requests
and a new paragraph (d)(4)(i)(B) to capture the new proposed option
that would apply to prior participants' requests beginning with the
2024 benefit year. Retaining the de minimis standard as the only option
for prior participants to justify the reduction and for HHS to approve
a request would help ensure that consumers would not experience an
increase in premiums greater than 1 percent as the result of a state
requested reduction in transfers, which aligns with the priorities
under E.O. 14009 to ensure that health care remains affordable for
consumers. HHS would continue to publish any requests submitted under
this revised framework, make them available for public comment, and
announce any approved or denied reduction requests in the applicable
benefit year's HHS notice of benefit and payment parameters, as set
forth in Sec. 153.320(d)(3).
We seek comment on this proposal to generally repeal the state
flexibility to request reductions in the transfers calculated by HHS
under the state payment transfer formula beginning with 2024 benefit
year, with the exception of states that previously submitted a risk
adjustment state flexibility request for any market risk pool. We also
seek comment on whether we should limit this repeal to the individual
market catastrophic and non-catastrophic risk pools (including merged
market states whose issuers report risk adjustment data in the
individual market) and continue to permit the submission of these
requests in the small group market only (including merged market states
whose issuers report risk adjustment data in the small group market).
We further seek comment on the proposed prior participant exception,
including the proposed definition for prior participants. We also seek
comment on the proposal to retain as the only option for state
justification and HHS approval of requested reductions beginning with
the 2024 benefit year the demonstration that the requested reduction
would have de minimis impact on the necessary premium increase to cover
the transfers for issuers that would receive reduced transfer payments,
and to remove the criterion related to the state demonstrating the
state-specific factors that warrant an adjustment to more precisely
account for relative risk differences in the applicable state market
risk pool. Finally, we seek comment on the health equity impacts of
these proposals, especially for underserved and minority communities.
5. Risk Adjustment Issuer Data Requirements (Sec. Sec. 153.610,
153.700, and 153.710)
In this section, we propose that issuers collect and make available
for HHS' extraction from issuers' EDGE servers five new data elements--
ZIP code,\156\ race, ethnicity, an ICHRA indicator, and a subsidy
indicator (APTC indicator at the policy-level)--as part of the required
risk adjustment data that issuers must make accessible to HHS in states
where HHS operates the risk adjustment program,\157\ beginning with the
2023 benefit year. We also propose that beginning with the 2022 benefit
year, HHS would extract from issuers' EDGE servers the following three
data elements that issuers already are required to make accessible to
HHS as part of the required risk adjustment data: Plan ID (which
represents the HIOS ID, state, product ID, standard component number,
and variant), rating area, and subscriber indicator. We also propose to
exclude plan ID, ZIP code, and rating area from the limited data set
HHS makes available to requestors for research purposes, but include
race, ethnicity, ICHRA indicator, subsidy indicator, and subscriber
indicator in that limited data set once available. Lastly, we propose
to expand and clarify the scope of permissible HHS uses for the data
and the reports extracted from issuer EDGE servers (including data
reports and ad hoc query reports). Related to these proposals, we also
consider the burden associated with the proposed collection and
extraction of these data elements and whether there are any policies
that HHS could pursue to encourage the consistent use and reporting of
ICD-10-CM z codes. The following subsections provide further discussion
of these proposals.
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\156\ ZIP code\TM\ is a trademark of the United States Postal
Service.
\157\ HHS has been operating the risk adjustment program in all
50 states and the District of Columbia since the 2017 benefit year.
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a. Background
Section 1343(b) of the ACA provides that the Secretary, in
consultation with States, shall establish criteria and methods to be
used in carrying out the risk adjustment activities under this section.
Consistent with section 1321(c) of the ACA, the Secretary is
responsible for operating the risk adjustment program in any state that
fails to do so.\158\ 45 CFR 153.610(a) requires that health insurance
issuers of risk adjustment covered plans submit or make accessible all
required risk adjustment data in accordance with the data collection
approach established by HHS \159\ in states where HHS operates the
program on behalf of a state. In the 2014 Payment Notice, HHS
established an approach for obtaining the necessary data for risk
adjustment calculations in states where HHS operates the program
through a distributed data collection model that prevented the transfer
of individuals' personally identifiable information (PII).\160\ Since
the 2016 benefit year, HHS required issuers of risk adjustment covered
plans to submit 95 data elements to their EDGE servers
[[Page 628]]
to support the HHS' calculation of risk adjustment transfers.\161\
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\158\ In the 2014 through 2016 benefit years, HHS operated the
risk adjustment program in every state and the District of Columbia,
except Massachusetts. Beginning with the 2017 benefit year, HHS has
operated the risk adjustment program in all 50 states and the
District of Columbia.
\159\ Also see 45 CFR 153.700-153.740.
\160\ See 78 FR at 15497-15500 and 45 CFR 153.720.
\161\ The full list of required data elements can be found in
Appendix A of OMB control number 0938-1155 (Standards Related to
Reinsurance, Risk Corridors, and Risk Adjustment (CMS-10401)), which
is currently being updated. The current Appendix A is available at
https://omb.report/icr/201712-0938-015/doc/79644301.pdf. The
previous version is available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201712-0938-015.
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Then, in the 2018 Payment Notice, we finalized policies for the
extraction and use of enrollee-level EDGE data beginning with the 2016
benefit year.\162\ The purpose of collecting and extracting enrollee-
level EDGE data was to provide HHS with more granular data to use to
recalibrate the HHS risk adjustment models and to use actual data from
issuers' individual and small group (and merged) market populations, as
opposed to the MarketScan[supreg] commercial database that approximates
these populations, for model recalibration purposes. We also finalized
the use of the extracted enrollee-level EDGE data to inform development
of the AV Calculator and methodology and noted the data could be a
valuable source for calibrating other HHS programs in the individual
and small group markets. In the 2020 Payment Notice, we expanded the
permitted uses of the extracted enrollee-level EDGE data to provide
that HHS may use these data and the reports extracted from issuers'
EDGE servers (including data reports and ad hoc query reports) to
calibrate and operationalize our individual and small group (including
merged) market programs, including to recalibrate the HHS risk
adjustment models, to inform updates to the AV Calculator, and to
conduct policy analysis for the individual and small group (including
merged) markets.\163\ These additional uses of the enrollee-level EDGE
data and reports enhance HHS' ability to develop and set policy for the
individual and small group (including merged) markets and avoid the
need to pursue alternative burdensome data collections from
issuers.\164\
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\162\ 81 FR 94058 at 94101.
\163\ 84 FR 17454, 17488.
\164\ We also clarified that our policies regarding HHS uses of
the enrollee-level EDGE data apply to the HHS components that
currently receive and use such data for purposes of the HHS risk
adjustment program. See ibid at 17488.
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b. Proposed Collection and Extraction of New Data Elements and
Extraction of Current Data Elements
Based on our experience accessing EDGE server data for the risk
adjustment model recalibration and analytics purposes, and as part of
our ongoing efforts to continuously improve HHS programs, we propose to
collect and extract new data elements from issuers' EDGE servers
through issuers' EDGE Server Enrollment Submission (ESES) files and
risk adjustment recalibration enrollment files, specifically: (1) ZIP
code, (2) race, (3) ethnicity, (4) subsidy indicator, and (5) ICHRA
indicator. For race and ethnicity data, we propose to require issuers
to report race and ethnicity in accordance with the October 30, 2011
HHS Implementation Guidance on Data Collection Standards for Race,
Ethnicity, Sex, Primary Language, and Disability Status (2011 HHS Data
Standards),\165\ which is collected at a granular level that would
allow HHS to better analyze more subpopulations than our current data
allows us to do, thereby allowing us to consider more areas of health
equity, as well as to better address discrimination in health care and
health disparities.\166\ We propose to require issuers of risk
adjustment covered plans to submit and make accessible these new data
elements to HHS in states where HHS operates the risk adjustment
program beginning with the 2023 benefit year. Extraction of these new
five data elements as part of the enrollee-level EDGE data and the
reports extracted from issuers' EDGE servers (including data reports
and ad hoc query reports) would begin with the 2023 benefit year.\167\
In addition to collecting and extracting these new data elements, we
also propose to extract plan ID, rating area, and subscriber indicator
as part of the enrollee-level EDGE data beginning with the 2022 benefit
year data and reports extracted from issuers' EDGE servers. For the
plan ID, rating area, and subscriber indicator, we note that issuers
are already required under current HHS program requirements to submit
these data elements to their EDGE servers.\168\
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\165\ https://aspe.hhs.gov/reports/hhs-implementation-guidance-data-collection-standards-race-ethnicity-sex-primary-language-disability-0.
\166\ As detailed further later in this preamble, issuers would
have the option of selecting ``unknown'' for this data element if
they do not have this information for a particular enrollee.
\167\ The deadline for submission of 2023 benefit year risk
adjustment data submissions is April 30, 2024. See 45 CFR 153.730.
\168\ The full list of required data elements can be found in
Appendix A of OMB control number 0938-1155 (Standards Related to
Reinsurance, Risk Corridors, and Risk Adjustment (CMS-10401)), which
is currently being updated. The current Appendix A is available at
https://omb.report/icr/201712-0938-015/doc/79644301.pdf. The
previous version is available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201712-0938-015.
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Collecting and extracting these new and current data elements would
allow HHS to further assess and analyze actuarial risk and risk
patterns in the individual, small group, and merged markets, and
determine if, based on future analysis, any refinements to the HHS risk
adjustment methodology, the AV Calculator, or other HHS individual or
small group (including merged) market programs should be proposed
through notice-and-comment rulemaking. For example, we propose to
collect and extract the ICHRA indicator to conduct analyses on whether
there are any unique actuarial characteristics of the ICHRA population
\169\ and to examine if employers with sicker enrollees are more
attracted to offering ICHRAs, and if ICHRA enrollment is impacting
state individual (or merged) market risk pools. We similarly want to
examine whether there are any risk patterns or impacts when analyzing
risk adjustment data using ZIP codes, race, ethnicity, and the subsidy
indicator. For example, we are interested in conducting analysis on
whether there are any cost differentials for certain conditions based
on race, ethnicity or subsidy indicator. For the three current data
elements that we are proposing to newly extract, our purpose would be
to similarly use these data to further assess risk patterns and the
impact of risk adjustment policies. For example, the extraction of
rating area data would provide HHS with more granular data to assess
risk patterns and impacts based on geographic differences. In addition,
the proposal to newly extract plan ID and subscriber indicator from
issuers' EDGE servers would allow HHS to be able to simulate transfers
using the enrollee-level data, which is currently not possible without
the plan ID.\170\
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\169\ Currently, HHS only collects information on an enrollee's
ICHRA status in connection with a special enrollment period
eligibility determination for Exchanges, which does not provide us
with complete data.
\170\ For the transfer simulation of the combined model
specification changes, HHS was not able to use the available
enrollee-level EDGE datasets. Instead, issuers needed to run
multiple EDGE Ad Hoc commands on their respective EDGE servers for
the simulation to be successful. See Section 5.2 of the 2021 RA
Technical Paper, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and the HHS-Operated Risk Adjustment
Technical Paper on Possible Model Changes: Summary Results for
Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
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We believe these proposed data collections and extractions would
serve the compelling government interest of promoting equity in health
coverage and care, as well as the ACA's goal of making high-quality
health care accessible and affordable for all individuals.
Specifically, we believe that the collection and extraction of these
new data elements would allow HHS to analyze and assess health equity
[[Page 629]]
impacts more than current data allow. Consistent with Executive Order
13985, ``Advancing Racial Equity and Support for Underserved
Communities Through the Federal Government,'' \171\ we believe this
proposal would facilitate our ability to assess the extent to which
specific communities experience barriers or challenges in accessing
benefits and opportunities available related to our individual, small
group, and merged market programs. This proposed data collection could
also facilitate our ability to assess whether new policies, regulation,
or guidance may be necessary or appropriate to further advance equity
within our programs in the individual, small group and merged markets.
We believe that the proposed collection and extraction of these data
elements is narrowly tailored to serve this compelling government
interest because this is the minimum data anticipated at this time that
would allow HHS to further assess and analyze actuarial risk and risk
patterns in the individual, small group, and merged markets. Consistent
with the policy adopted in the 2020 Payment Notice regarding the use of
data and reports extracted from issuer EGDE servers (including data
reports and ad hoc query reports), and our proposal below to expand the
permissible HHS uses of such data and reports, we would collect,
extract and use these new and current data elements to conduct policy
analysis for HHS programs in the individual and small group (including
merged) markets and to inform policy analyses and improve the integrity
of other HHS federal health-related programs to the extent such use is
otherwise authorized by, required under, or not inconsistent with
applicable federal law.
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\171\ E.O. 13985 is 86 FR 7009 available at https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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In the proposed 2020 Payment Notice, we sought comment on the
advantages and disadvantages of extracting state and rating area data
as part of the enrollee-level EDGE data for use to recalibrate the HHS-
operated risk adjustment models, to inform updates to the AV Calculator
and methodology, and to conduct policy analyses for other HHS
individual and small group (including merged) market programs.\172\ We
explained that extracting these geographic details could enable HHS to
assess the impact of differences in geographic factors in the HHS risk
adjustment methodology and to better estimate the AV of plans based on
cost differences across regions. We also noted that extraction of
geographic details (state and rating area) could help support other HHS
programs and policy priorities, as well as provide additional data
elements for researchers. However, after consideration and review of
the public comments received on the proposed 2020 Payment Notice, we
did not finalize the proposed extraction of these data elements. We
explained that, at that time, in response to stakeholder feedback, we
did not believe that the benefits of these additional data element
extractions would outweigh the potential increased risk to issuers'
proprietary information and increased issuer burden.\173\
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\172\ 84 FR 227 at 251.
\173\ 84 FR 17454 at 17488.
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However, in light of E.O. 13985 and E.O. 14009, we have continued
to consider whether extraction of these data elements would support and
enhance HHS' policy analysis capabilities with regard to the HHS risk
adjustment program, as well as other HHS individual and small group
(including merged) market programs that seek to provide access to
health care to consumers. Based on this further analysis and
consideration, HHS has determined that the proposed extraction of
rating area data, along with the proposed collection and extraction of
the other data elements discussed in this proposal, align with the
policy goals in E.O. 13985 and E.O. 14009 and would provide HHS with
more granular data to help improve HHS' analytical capacity to assess
equity impacts of programs impacted by this proposed rule, including
our capacity to identify potential refinements to the HHS risk
adjustment methodology, consider policy and operational changes to
improve other HHS individual and small group (including merged) market
programs, and identify ways to address health equity issues in these
programs. For example, HHS believes that analysis of the additional
data elements proposed for collection and extraction from issuers' EDGE
servers would help HHS better monitor trends in the health insurance
markets, inform HHS analyses of whether updates to the QHP
certification review processes would be necessary or appropriate,\174\
and inform QHP compliance reviews and subregulatory guidance. HHS also
is of the view that the additional data elements proposed for
collection and extraction from EDGE servers could be valuable in
assessing policy and operational issues in connection with programs
that are not centered around the individual or small group (including
merged) commercial health insurance markets, such as the wrap-around
QHP coverage offered to Medicaid expansion populations in some states
\175\ and coverage offered by non-federal governmental plans.\176\
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\174\ Each year, HHS provides an overview of its QHP
certification review processes in the annual Letter to Issuers in
the FFEs. The 2022 Final Letter to Issuers in the FFEs is available
at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2022-Letter-to-Issuers-in-the-Federally-facilitated-Marketplaces.pdf.
\175\ See, e.g., https://www.medicaid.gov/medicaid/downloads/wraparound-benefits.pdf.
\176\ Non-federal governmental plans are subject to many PHS Act
federal market reform requirements. See, e.g., 42 U.S.C. 300gg-
21(a)(1)(A). Also see 42 U.S.C. 300bb-1, et seq. HHS is generally
responsible for enforcement of provisions of the PHS Act that apply
to non-federal governmental plans. See, e.g., 42 U.S.C. 300gg-
22(b)(1)(B) and 45 CFR 150.301, et seq.
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Additionally, HHS continually considers methods and mechanisms to
identify discriminatory practices in the commercial health insurance
markets and HHS federal health-related programs. The additional data we
propose to collect and extract from issuers' EDGE servers also would
inform future policy to better address discrimination and other
systemic barriers in health care and health disparities that may exist
in connection with coverage offered in the commercial health insurance
markets, as well as in other HHS federal health-related programs that
do not focus on commercial health insurance.
For all of the reasons discussed in this section, HHS proposes to
collect and extract the proposed five new data elements outlined above
as part of the required risk adjustment data issuers must make
accessible to HHS through their respective EDGE servers beginning with
the 2023 benefit year. We also propose to extract plan ID, rating area,
and subscriber indicator as part of the EDGE enrollee-level data set
beginning with the 2022 benefit year.\177\ We note that any changes to
the risk adjustment methodology or other policies based on HHS's
analysis of these data would be set forth in notice and comment
rulemaking.
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\177\ We propose to extract plan ID, rating area, and subscriber
indicator for the 2022 benefit year, which is one year earlier than
we propose to extract the other five new data elements, because
issuers already submit plan ID, rating area, and subscriber
indicator to their EDGE servers.
---------------------------------------------------------------------------
We seek comments on these proposals, including feedback
specifically on whether we should extract only certain portions of the
plan ID, such as the five-digit HIOS ID, two-character state ID, three-
digit product number, four-digit standard component
[[Page 630]]
number, two-digit variant ID, or any combination thereof.\178\
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\178\ For additional explanation of the plan ID components, see
pg. 42 of the CMS Standard Companion Guide Transaction Information:
Instructions related to the ASC X12 Benefit Enrollment and
Maintenance (834) transaction, based on the 005010X220
Implementation Guide and its associated 005010X220A1 addenda for the
FFE, available at https://www.cms.gov/cciio/resources/regulations-and-guidance/downloads/companion-guide-for-ffe-enrollment-transaction-v15.pdf.
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c. Limited Data Set
In conjunction with the proposed collection and extraction of the
new and current data elements in this proposed rule, we propose to
exclude plan ID, ZIP code, and rating area from the limited data set
containing enrollee-level EDGE data that HHS makes available to
qualified researchers.\179\ However, we propose to include race,
ethnicity, ICHRA indicator, subsidy indicator, and subscriber indicator
in the limited data set once they are available.\180\ In the 2020
Payment Notice, we finalized our proposal to create on an annual basis
a limited data set file using masked enrollee-level data submitted to
HHS from issuers' EDGE servers. The limited data set file is made
available to requestors who seek the data for research purposes
only.\181\ We adopted this policy because we believed making the
limited data set file available to qualified researchers upon request
would increase understanding of these markets and contribute to greater
transparency. HHS strictly adheres to all the requirements and CMS
guidelines related to providing the limited data set to qualified
researchers, including requiring the recipient of the limited data set
to enter into a data use agreement that establishes the permitted uses
or disclosures of the information and prohibits the recipient from
identifying the information. We believe that including race, ethnicity,
ICHRA indicator, subsidy indicator, and subscriber indicator would
enhance the usefulness of the limited data set for research and would
continue to protect enrollees' PII and issuers' proprietary
information. Although we believe that including plan ID, ZIP code, and
rating area in the limited data set similarly would enhance the
usefulness of the limited data set, we believe this would raise
significant concerns for issuers given previous comments noting the
competitive and proprietary nature of these geographic identifiers. We
therefore propose to not include these geographic identifiers as part
of the limited data set that HHS makes available to qualified
researchers upon request. We seek comments on the proposal to exclude
plan ID, ZIP code, and rating area, and to include race, ethnicity,
ICHRA indicator, subsidy indicator, and subscriber indicator as part of
the enrollee-level EDGE limited data set made available to qualified
researchers upon request. We seek comment on this proposal, including
about whether collecting race and ethnicity data in accordance with the
2011 HHS Data Standards would require systems changes and about any
costs associated with such changes. If finalized as proposed, race,
ethnicity, the ICHRA indicator, and the subsidy indicator would be
included beginning with the 2023 benefit year enrollee-level EDGE
limited data set. Subscriber indicator would be included beginning with
the 2022 benefit year enrollee-level EDGE limited data set if the
proposal to extract that data element is finalized as proposed. We
appreciate the sensitivities related to enrollee-level EDGE data and
the importance of ensuring that our policies continue to safeguard
enrollees' privacy and security and issuers' proprietary information.
Thus, we are particularly interested in feedback on any privacy or
confidentiality concerns with including these elements in the limited
data set made available to qualified researchers upon request.
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\179\ See 84 FR at 17487.
\180\ As proposed, the subscriber indicator would be included in
the enrollee-level data HHS extracts from issuer EDGE servers
beginning with the 2022 benefit year; therefore, this new data field
would be included beginning with the 2022 benefit year limited data
set. As proposed, race, ethnicity, ICHRA indicator, and subsidy
indicator would be included in the enrollee-level data HHS extracts
from issuer EDGE servers beginning with the 2023 benefit year;
therefore, these data fields would be included beginning with the
2023 benefit year limited data set.
\181\ As explained in the 2020 Payment Notice, we do not
currently make the limited data set available to requestors for
public health or health care operation activities. See 84 FR at
17488.
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d. Proposal To Expand Permissible Uses of EDGE Data
We also propose to expand the permitted uses of the data and
reports (including data reports and ad hoc query reports) extracted
from issuers' EDGE servers to include other HHS federal health-related
programs outside of the commercial individual and small group
(including merged) markets. This proposed expansion would apply to data
that HHS already collects as well as the proposed collection and
extraction of ZIP code, race, ethnicity, subsidy indicator, ICHRA
indicator, plan ID, rating area, and subscriber indicator as outlined
in this rule. The proposed expansion to the permitted uses of the EDGE
data and reports would apply as of the effective date of the final
rule. Specifically, HHS proposes to expand the uses of the data and
reports HHS extracts from issuers' EDGE servers to include not only the
specific uses for purposes we identified in the 2020 Payment Notice
\182\--that is, to calibrate and operationalize our individual and
small group (including merged) market programs (including assessing
risk in the market for risk adjustment purposes and informing updates
to the AV Calculator), and to conduct policy analysis for the
individual and small group (including merged) markets--but also for the
purposes of informing policy analyses and improving the integrity of
other HHS federal health-related programs, to the extent such use of
the data is otherwise authorized by, required under, or not
inconsistent with applicable federal law. For example, certain states
have wrap-around coverage that include enrolling their Medicaid
expansion populations in QHPs and those enrollees are currently
reflected in the enrollee-level EDGE data. Under this proposal to
expand the permitted uses of EDGE data and reports, it would be clear
that HHS could use this information to inform policy analyses and
improve the integrity of these Medicaid expansion population
approaches. Similarly, to the extent appropriate, this proposal would
allow HHS to use the EDGE data and reports to inform policy analyses
related to PHS Act requirements enforced by HHS that are applicable
market-wide \183\ and those that are applicable to non-federal
governmental plans.\184\ Consistent with our current policy, the
proposals in this rule related to HHS use of the enrollee-level EDGE
data and reports would apply to the HHS components that currently
receive and use such data for purposes of the HHS risk adjustment
program. Other government components would be able to request the
enrollee-level EDGE limited data set file for research, as that term is
defined under Sec. 164.501. We also note that the enrollee-level EDGE
data, including the data elements proposed for collection and
extraction in this rule, may be subject to disclosure as otherwise
required by law.\185\
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\182\ See 84 FR 17488.
\183\ See, for example, 42 U.S.C. 300gg-300gg-28.
\184\ Non-federal governmental plans are subject to many PHS Act
federal market reform requirements. See, e.g., 42 U.S.C. 300gg-
21(a)(1)(A). Also see 42 U.S.C. 300bb-1, et seq. HHS is generally
responsible for enforcement of provisions of the PHS Act that apply
to non-federal governmental plans. See, e.g., 42 U.S.C. 300gg-
22(b)(1)(B) and 45 CFR 150.301, et seq.
\185\ See, for example, 2 U.S.C. 601(d).
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[[Page 631]]
We note that any changes to our policies that result from analysis
of these data, such as using the data to modify the state payment
transfer formula, would be subject to notice and comment rulemaking.
Furthermore, we would not use the additional data elements or any
analysis of them to pursue changes to our policies until we conduct
thorough data quality checks. For example, in submitting data on race
and ethnicity, issuers would have the option of selecting ``unknown''
for these data elements and we would ensure an adequate response rate
before conducting analyses that could inform policy decisions. We would
similarly ensure an adequate response rate with respect to submission
of the ICHRA indicator before conducting analyses that could inform
policy decisions.\186\ We solicit comment on this proposal to expand
the permitted uses of the enrollee-level EDGE data.
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\186\ As detailed later, we propose to adopt a transition
approach for the ICHRA indicator, which would make this data field
optional for the 2023 and 2024 benefit years.
---------------------------------------------------------------------------
e. Burden for Collecting and Extracting Additional Data Elements
As stated above, we propose to extract plan ID, rating area, and
subscriber indicator from issuers' EDGE servers to consider for use in
risk adjustment model recalibration and other potential refinements to
the HHS-operated risk adjustment program, as well as to conduct policy
analysis for HHS federal health-related programs, including those
related to the individual and small group (including merged) health
insurance markets and HHS non-commercial market programs, beginning
with the 2022 benefit year. While collecting additional data elements
may represent increased burden for issuers, there would be little to no
additional issuer burden related to extracting these three proposed
data elements because HHS extracts and stores the data, and issuers
would only be required to execute a command provided by HHS to generate
the EDGE report(s) containing all required data elements. Since issuers
are already required to include these three data elements (plan ID,
rating area, and subscriber indicator) as part of the required risk
adjustment submissions to their respective EDGE servers, we believe
there would be little to no additional burden associated with the
proposed extraction of these three data elements beginning with the
2022 benefit year.
As stated above, we also propose to require issuers to include five
new data elements--ZIP code, race, ethnicity, an ICHRA indicator, and a
subsidy indicator--as part of their risk adjustment submissions to
issuer EDGE servers beginning with the 2023 benefit year. We believe
issuers currently collect ZIP codes; therefore, the burden associated
with the proposed collection of this data element through issuer EDGE
servers would only be the additional effort and expense for issuers to
compile and submit this additional data element to their EDGE servers,
as well as to retain this data element as part of their risk adjustment
records as required under Sec. 153.620(b). Because the subsidy
indicator is derived from existing data,\187\ we believe the burden
would again only be the additional effort and expense for issuers to
compile and submit this data element to their EDGE servers, as well as
to retain this data element as part of their risk adjustment records as
required under Sec. 153.620(b). In contrast, we do not believe
information to populate the ICHRA indicator is routinely collected by
all issuers at this time; therefore, in recognition of the burden that
collection of this new data element potentially would pose for some
issuers, we propose to make submission of the ICHRA indicator on
issuers' EDGE servers optional for the 2023 and 2024 benefit years.
This transitional approach for the ICHRA indicator would be similar to
how we have handled other new data collection requirements \188\ and
would allow issuers additional time to develop processes for
collection, validation and submission of this new data field before it
is required.
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\187\ Subsidy indicator is derived from the Marketplace
enrollment data communicated to issuers where this data provides the
APTC amount for an enrollee. Issuers would be able to use this
information to derive the subsidy indicator for each enrollee.
\188\ For example, HHS did not penalize issuers for temporarily
submitting a default value for the in/out-of-network indicator for
the 2018 benefit year in order to give issuers time to make the
necessary changes to their operations and systems to comply with the
new data collection requirement, but required issuers to provide
full and accurate information for the in/out-of-network indicator
beginning with the 2019 benefit year.
---------------------------------------------------------------------------
We believe that most issuers currently collect race and ethnicity
data in some manner, and therefore the burden associated with the
collection of this information through issuer EDGE servers would only
be the additional effort and expense for issuers to compile and submit
these additional data elements to their EDGE servers and retain these
data elements as part of their risk adjustment records as required
under Sec. 153.620(b). However, we are interested in comments on the
collection of these data elements, issuers' rate of collections of
these data elements in accordance with the 2011 HHS Data Standards
\189\ and whether there are any considerations about the availability
and current collection of these data elements that HHS should be aware
of, given that these data fields are often an optional field on health
insurance application and enrollment forms.\190\ We also acknowledge
that some of these new proposed data elements, such as race and
ethnicity and the ICHRA indicator, may be collected by HHS from FFE or
SBE-FP enrollees through the QHP application process and from State
Exchange enrollees through the State Exchange enrollment and payment
files and our intention would be to structure these data elements
similar to current collections, where possible. However, this proposal
would require all issuers of risk adjustment covered plans to make
these data elements accessible to HHS through their EDGE servers as
part of the required risk adjustment data submissions in states where
HHS operates the risk adjustment program. The data that issuers submit
to their EDGE servers would be more uniform and comprehensive than
information submitted by FFE and SBE-FP enrollees on a QHP application
and by State Exchange enrollees through enrollment and payment files,
as it would represent all enrollees in risk adjustment covered plans,
including coverage offered inside and outside of Exchanges. By
collecting these data as part of the required risk adjustment data
issuers submit to their respective EDGE servers, HHS would also have
the ability to extract and aggregate these data elements with other
claims and enrollment data accessible through issuer EDGE servers,
which would not be possible with the data collected from consumers
through other processes because the EDGE data is masked \191\ and
therefore cannot be linked with other sources. We considered the
possibility of using data imputation methods with existing
HealthCare.gov application data to construct a simulated dataset and
conduct preliminary exploratory analysis, but once again determined
that
[[Page 632]]
we would be unable to impute data from the applications due to the EDGE
data being masked. We therefore do not view this as a duplicative data
collection. Our proposal also would ensure HHS has access to the same
information in the same format for on- and off-Exchange enrollments, as
well as across all Exchange types--FFEs, SBE-FPs and State Exchanges--
for the individual, small group and merged markets.
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\189\ HHS Implementation Guidance on Data Collection Standards
for Race, Ethnicity, Sex, Primary Language, and Disability Status
[bond] ASPE See HHS Implementation Guidance on Data Collection
Standards for Race, Ethnicity, Sex, Primary Language, and Disability
Status [bond] ASPE, available at https://aspe.hhs.gov/reports/hhs-implementation-guidance-data-collection-standards-race-ethnicity-sex-primary-language-disability-0.
\190\ Race and ethnicity questions, for example, are optional on
the HealthCare.gov application. See https://www.reginfo.gov/public/do/PRAICList?ref_nbr=201903-0938-016 (Attachment A, page 27-28).
\191\ 45 CFR 153.720.
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To fully assess the additional issuer burden resulting from this
proposal, we seek comment on the relative value of the additional data
elements we propose to require when compared to other data elements we
could propose to collect. For instance, we seek comment on whether HHS
should consider collecting county data in lieu of ZIP code, and also
solicit comment on whether HHS should consider requiring issuers to
report census tract data, instead of ZIP codes or county data.
Specifically, we understand that five-digit ZIP codes can change on a
regular basis, which could limit the usefulness of this data element
when comparing data across benefit years. Census tract data or county
data, therefore, may be more useful. We also clarify that, while race
and ethnicity would be required data submission elements under these
proposals, issuers would have the option of selecting ``unknown'' for
this data element, which aligns with the approach taken for application
and enrollment forms. In other words, issuers would not be penalized if
they did not have the data for a particular enrollee. Instead, this
proposal is designed to require the submission of race and ethnicity
data if a particular enrollee provided it to their respective issuer.
We also seek comment on how issuers may already be collecting data on
race and ethnicity in order to identify alternatives that HHS could
consider to further ease the burden of this collection while also
meeting the stated goals of collecting data to analyze more
subpopulations than the current data allows, consider more areas of
health equity, and better address discrimination in health care and
health disparities.
f. Encouraging the Use of Z Codes
We seek comment on the collection and extraction of z codes
(particularly Z55-Z65), a subset of ICD-10-CM encounter reason codes
used to identify, analyze, and document social determinants of
health.\192\ We are currently collecting z codes in the enrollee-level
EDGE data and have started analyzing those codes.\193\ However, we
understand there have been reports of a lack of consistent use of z
codes by providers \194\ and we want to encourage consistent use of z
codes to help further assess risk in the individual, small group and
merged market risk pools. We solicit comment on whether there are
policies that HHS should pursue that could encourage consistent use of
z codes by providers to support collection and use of the data for the
HHS-operated risk adjustment program. In light of E.O. 13985 and E.O.
14009, HHS is interested in analyzing z code data to learn about the
relationship between risk and the social determinants of health.
Finally, we seek comment on whether there are other data elements HHS
should consider collecting and extracting to support the operation of
the HHS-operated risk adjustment program.
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\192\ See CMS Infographic: Using Z Codes: The Social
Determinants of Health; Data Journey to Better Outcomes, available
at https://www.cms.gov/files/document/zcodes-infographic.pdf, last
accessed Nov. 5, 2021. See also Utilization of Z Codes for Social
Determinants of Health Among Medicare Fee-for-Service Beneficiaries,
2019, available at https://www.cms.gov/files/document/zcodes-infographic.pdf.
\193\ Using the 2019 enrollee-level EDGE data, we found that
only 0.49 percent of the population had a code within Z55-Z65 range.
These enrollees had higher costs than enrollees without a Z55-Z65
code across all age/sex and market/metal/CSR categories.
\194\ See https://journals.lww.com/lww-medicalcare/Fulltext/2020/12000/Utilization_of_Social_Determinants_of_Health.2.aspx.
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6. Risk Adjustment User Fee for 2023 Benefit Year (Sec. 153.610(f))
HHS proposes a risk adjustment user fee for the 2023 benefit year
of $0.22 per member per month (PMPM). Under Sec. 153.310, if a state
is not approved to operate, or chooses to forgo operating, its own risk
adjustment program, HHS will operate risk adjustment on its behalf. As
noted previously in this proposed rule, for the 2023 benefit year, HHS
will be operating the risk adjustment program in every state and the
District of Columbia. As described in the 2014 Payment Notice, HHS'
operation of risk adjustment on behalf of states is funded through a
risk adjustment user fee.\195\ Section 153.610(f)(2) provides that,
where HHS operates a risk adjustment program on behalf of a state, an
issuer of a risk adjustment covered plan must remit a user fee to HHS
equal to the product of its monthly billable member enrollment in the
plan and the PMPM risk adjustment user fee specified in the annual HHS
notice of benefit and payment parameters for the applicable benefit
year.
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\195\ 78 FR 15409 at 15416-15417.
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OMB Circular No. A-25 established federal policy regarding user
fees, and specifies that a user charge will be assessed against each
identifiable recipient for special benefits derived from federal
activities beyond those received by the general public. The HHS-
operated risk adjustment program provides special benefits as defined
in section 6(a)(1)(B) of Circular No. A-25 to issuers of risk
adjustment covered plans because it mitigates the financial instability
associated with potential adverse risk selection. The risk adjustment
program also contributes to consumer confidence in the health insurance
industry by helping to stabilize premiums across the individual,
merged, and small group markets.
In part 2 of the 2022 Payment Notice final rule, we calculated the
federal administrative expenses of operating the risk adjustment
program for the 2022 benefit year to result in a risk adjustment user
fee rate of $0.25 PMPM based on our estimated costs for risk adjustment
operations and estimated billable member months for individuals
enrolled in risk adjustment covered plans.\196\ For the 2023 benefit
year, HHS proposes to use the same methodology to estimate our
administrative expenses to operate the risk adjustment program. These
costs cover development of the model and methodology, collections,
payments, account management, data collection, data validation, program
integrity and audit functions, operational and fraud analytics,
stakeholder training, operational support, and administrative and
personnel costs dedicated to risk adjustment program activities. To
calculate the user fee, we divided HHS' projected total costs for
administering the risk adjustment program on behalf of states by the
expected number of billable member months in risk adjustment covered
plans in states where the HHS-operated risk adjustment program will
apply in the 2023 benefit year.
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\196\ 86 FR 24140 at 24195-24196.
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We estimate that the total cost for HHS to operate the risk
adjustment program on behalf of states for the 2023 benefit year will
be approximately $60 million, and therefore, the proposed risk
adjustment user fee is $0.22 PMPM. The risk adjustment user fee costs
for the 2023 benefit year are expected to remain steady from the prior
2022 benefit year estimates. However, we project a small increase in
billable member months in the individual and small group (including
merged) markets overall in the 2023 benefit year based on the
enrollment increases observed in the 2020 benefit year prior to
implementation of the ARP in 2021. The
[[Page 633]]
assumption that the enhanced premium tax credit subsidies in section
9661 of the ARP will expire after the 2022 benefit year significantly
influenced our development of the 2023 enrollment and premium
projections used to develop the proposed risk adjustment user fee for
the 2023 benefit year. We expect the expiration of this ARP provision
to revert enrollment projections to the pre-ARP level observed in the
2020 benefit year. We seek comment on the proposed risk adjustment user
fee for the 2023 benefit year.
7. Compliance With Risk Adjustment Standards; High-Cost Risk Pool
Funds--Audits of Issuers of Risk Adjustment Covered Plans (Sec.
153.620(c))
HHS proposes that whenever HHS recoups high-cost risk pool funds as
a result of audits of risk adjustment covered plans under Sec.
153.620(c)(5)(ii), the high-cost risk pool funds recouped from an
issuer in an applicable national high-cost risk pool \197\ would be
used to reduce high-cost risk pool charges for that national high-cost
risk pool beginning for the current benefit year, if high-cost risk
pool payments have not already been calculated for that benefit year.
If high-cost risk pool payments have already been calculated for the
current benefit year, we propose to use the recouped high-cost risk
pool funds to reduce the next applicable benefit year's high-cost risk
pool charges for all issuers owing high-cost risk pool charges for that
national high-cost risk pool.
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\197\ The high-cost risk pool calculation under the HHS risk
adjustment methodology involves two national risk pools--one for the
individual market (including catastrophic and non-catastrophic
plans, and merged market plans), and another for the small group
market. See, for example, 81 FR at 94080-94082.
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In part 2 of the 2022 Payment Notice final rule, HHS codified
several requirements related to the audits and compliance reviews of
risk adjustment covered plans.\198\ We did not finalize our
disbursement proposal for high-cost risk pool payments or charges
recovered by HHS during an audit of a risk adjustment covered plan
under Sec. 153.620(c), but stated our intention to address this issue
in future rulemaking.\199\ As such, we are proposing here that any
high-cost risk pool funds recouped through an audit under Sec.
153.620(c)(5)(ii) would be disbursed in the next benefit year for which
high-cost risk pool payments have not already been calculated, in the
form of reduced charges for all issuers owing high-cost risk pool
charges in the applicable national high-cost risk pool. If HHS recoups
high-cost risk pool funds after the current benefit year's high-cost
risk pool payments have been calculated, we propose to apply the high-
cost risk pool funds recouped through an audit under Sec.
153.620(c)(5)(ii) to reduce the next applicable benefit year's high-
cost risk pool charges for all issuers owing high-cost risk pool
charges for the applicable national high-cost risk pool. For example,
if a 2018 high-cost risk pool audit results in funds being recouped for
the national high-cost risk pool for the individual market in March
2022, then these recouped funds would be disbursed in the form of
reduced 2021 benefit year high-cost risk pool charges for issuers in
the national high-cost risk pool for the individual market because
high-cost risk pool payments for the 2021 benefit year are not
calculated until June 2022. Notwithstanding any reduction to a national
high-cost risk pool's charges for a given benefit year, this proposed
policy would not impact the amount of high-cost risk pool payments made
to eligible issuers, because the reduction in charges is due to the
recoupment of funds as the result of an audit of a prior benefit year
rather than a change in payments for the given benefit year. In
addition, the calculation of high-cost risk pool charges and payments
will continue to be calculated in accordance with the established
policies, terms and factors.200 201 We believe this proposal
is consistent with our general policy that HHS would not rerun or
otherwise recalculate high-cost risk pool charges and payments for the
applicable benefit year if monies are recouped as a result of an audit
under Sec. 153.620(c).\202\
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\198\ See 86 FR 24140 at 24287.
\199\ We proposed that any high-cost risk pool payments or
charges recovered by HHS during an audit of a risk adjustment
covered plan would be paid on a pro rata basis to other issuers in
the relevant national high-cost risk pool in the form of a reduced
high-cost risk pool charge in the applicable benefit year. See 85 FR
78572 at 78604.
\200\ See 81 FR 94058, 94081. Also see 84 FR 17454, 17467 (We
are finalizing the $1 million threshold and 60 percent coinsurance
rate for 2020 benefit year and beyond without requiring notice and
comment on the high-cost risk pool thresholds each year.). We are
not proposing changes to the high-cost risk pool parameters for the
2023 benefit year. Therefore, we would maintain the $1 million
threshold and 60 percent coinsurance rate.
\201\ For a visual illustration of the high-cost risk pool terms
and factors, see 86 FR at 24184-24185.
\202\ 86 FR 24140 at 24193.
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We also clarify that when HHS recoups high-cost risk pool funds as
a result of an audit, the issuer subject to the audit would then be
responsible for reporting that adjustment to its high-cost risk pool
payments or charges in the next MLR reporting cycle consistent with the
applicable instructions in Sec. 153.710(h). Additionally, for any
benefit year in which high-cost risk pool charges are reduced as a
result of recouped audit funds, issuers whose charge amounts are
reduced would report the high-cost risk pool charges paid for that
benefit year net of recouped audit funds in the next MLR reporting
cycle consistent with Sec. 153.710(h).
We also propose that any high-cost risk pool funds recouped as a
result of an actionable discrepancy or successful administrative appeal
filed pursuant to Sec. Sec. 153.710(d) and 156.1220, respectively,
would be treated the same way, that is, any high-cost risk pool funds
recouped based on an actionable discrepancy or successful appeal would
be used to reduce high-cost risk pool charges for that national high-
cost risk pool for the next benefit year for which high-cost risk pool
payments have not already been calculated. Additionally, issuers would
similarly be responsible for reporting any high-cost risk pool related
adjustments that result from the recoupment of funds due to an
actionable discrepancy or successful administrative appeal in the next
MLR reporting cycle consistent with Sec. 153.710(h).
We seek comment on these proposals.
8. Risk Adjustment Data Validation Requirements When HHS Operates Risk
Adjustment (HHS-RADV) (Sec. Sec. 153.350 and 153.630)
To ensure the integrity of the HHS-operated risk adjustment
program, HHS conducts risk adjustment data validation (HHS-RADV) under
Sec. Sec. 153.350 and 153.630 in any state where HHS is operating risk
adjustment on a state's behalf. \203\ The purpose of HHS-RADV is to
ensure issuers are providing accurate and complete risk adjustment data
to HHS, which is crucial to the purpose and proper functioning of the
HHS-operated risk adjustment program. HHS-RADV also ensures that risk
adjustment transfers reflect verifiable actuarial risk differences
among issuers, rather than risk score calculations that are based on
poor data quality, thereby helping to ensure that the HHS-operated risk
adjustment program assesses charges to issuers with plans with lower-
than-average actuarial risk while making payments to issuers with plans
with higher-than-average actuarial risk. HHS-RADV consists of an IVA
and an SVA. Under Sec. 153.630, each issuer of a risk
[[Page 634]]
adjustment covered plan must engage an independent IVA entity. The
issuer provides demographic, enrollment, prescription drug, and medical
record documentation for a sample of enrollees selected by HHS to the
issuer's IVA entity. Each issuer's IVA is followed by an SVA, which is
conducted by an entity HHS retains to verify the accuracy of the
findings of the IVA. Based on the findings from the IVA and SVA as
applicable, HHS conducts error estimation to calculate an error rate.
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\203\ HHS has operated the risk adjustment program in all 50
states and the District of Columbia since the 2017 benefit year.
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In the 2020 HHS-RADV Amendments Rule,\204\ we described and
finalized the error rate calculation methodology for HHS-RADV
applicable for benefit years 2019 and onward. In this rule, we propose
further refinements to the HHS-RADV error rate calculation methodology
beginning with the 2021 benefit year and beyond to: (1) Extend the
application of Super HCCs to also apply to coefficient estimation
groups throughout the HHS-RADV error rate calculation processes, (2)
specify that the Super HCC will be defined separately according to the
age group model to which an enrollee is subject, and (3) constrain to
zero any outlier negative failure rate in a failure rate group,
regardless of whether the outlier issuer has a negative or positive
error rate.
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\204\ 85 FR 76979.
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HHS is committed to ensuring the integrity and reliability of HHS-
RADV and continuously improving the error rate calculation methodology
and program requirements. As part of our ongoing efforts to explore
potential modifications to the HHS-RADV error rate calculation
methodology, we have identified through our own analysis, and through
feedback from stakeholders, these areas for further refinement. We
believe these proposals will better align the calculation and
application of error rates with the intent of the HHS-RADV program,
thereby enhancing the integrity of HHS-RADV and the HHS-operated risk
adjustment program.
a. Coefficient Estimation Groups in Error Estimation
First, we propose to modify our process for grouping coefficient
estimation groups in error estimation. In the 2020 HHS-RADV Amendments
Rule,\205\ we finalized a policy to ensure that HCCs that share a
coefficient estimation group used in the risk adjustment models are
sorted into the same failure rate groups by first aggregating any HCCs
that share a coefficient estimation group into Super HCCs before
applying the HHS-RADV failure rate group sorting algorithm. Since
implementing the Super HCC policy, we found there are rare occasions
where there is a minor misalignment between the calculation of risk
adjustment plan liability risk score (PLRS) values and HHS-RADV error
estimation. To address these rare situations, in this rule we propose
to modify the Super HCC policy to apply the coefficient estimation
group logic as expressed in the applicable benefit year's DIY software
throughout the HHS-RADV error rate calculation methodology, as they are
in risk adjustment. We propose to adopt these changes beginning with
the 2021 benefit year of HHS-RADV.
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\205\ See 85 FR 76979 at 76984-76989.
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The majority of HCCs in a coefficient estimation group are in the
same hierarchy, but in rare instances an individual enrollee may be
recorded on an issuer's EDGE server as having multiple HCCs in an HCC
coefficient estimation group that do not have a direct hierarchical
relationship to one another. For example, based on the 2021 DIY
software Tables 4 and 6,\206\ HCC 61 Osteogenesis Imperfecta and Other
Osteodystrophies shares coefficient estimation group G04 with HCC 62
Congenital/Developmental Skeletal and Connective Tissue Disorders in
the adult risk adjustment models, but the two HCCs are not
hierarchically related. However, even if an enrollee has both unrelated
conditions, the enrollee only receives the coefficient for one of those
conditions in the enrollee's risk adjustment risk score calculation
because both conditions share the same coefficient estimation group.
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\206\ See, for example, the August 3, 2021 version of the DIY
software is available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
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To further explain, when such HCCs share a direct hierarchical
relationship, the presence of the more severe condition nullifies the
presence of the less severe condition; that is, the enrollee will
receive credit in risk adjustment and HHS-RADV for only the most severe
of the two conditions. Similarly, in risk adjustment, when HCCs that
share a coefficient estimation group do not share a direct hierarchical
relationship, an enrollee will have both HCCs nullified and replaced
with a single instance of a variable indicating the presence of HCCs in
that coefficient estimation group, as seen in DIY software Tables 6 and
7, leading to the enrollee only receiving one indicator of risk across
both conditions. However, in this latter case, the process of
nullifying and replacing the HCCs with the variable representing the
coefficient estimation group is not currently replicated in the
calculation of HHS-RADV failure rates, group adjustment factors, or
enrollee adjustment factors, so it is possible for an enrollee to be
recorded in their EDGE, IVA, or SVA data as having both conditions for
the purposes of HHS-RADV.
The nullification and replication process in the risk adjustment
risk score calculation de-duplicates conditions in coefficient
estimation groups in the same way that multiple HCCs that share a
hierarchical relationship are de-duplicated. However, there is no
analogous de-duplication process for coefficient estimation groups in
HHS-RADV.\207\ As such, it is possible for an enrollee to be recorded
as having multiple conditions in a coefficient estimation group for
HHS-RADV, requiring the issuer to be able to validate both conditions
to avoid receiving an HHS-RADV adjustment to the enrollee's risk score,
even though the enrollee only received the coefficient for one of those
conditions in the enrollee's risk adjustment risk score calculation.
Therefore, beginning with the 2021 benefit year of HHS-RADV, we are
proposing to extend the Super HCC policy finalized in the 2020 HHS-RADV
Amendments Rule, such that HHS will apply the coefficient estimation
group logic as expressed in the applicable benefit year's DIY software
\208\ throughout HHS-RADV error estimation, rather than just at the
sorting step that assigns HCCs to failure rate groups. This change
would mean that an issuer would only need to validate one HCC in a
coefficient estimation group to avoid further impacting an adjustment
to an enrollee's risk score in HHS-RADV, aligning with how an
enrollee's risk score \209\ would be calculated under the state payment
transfer formula.
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\207\ It is rare for an enrollee to have two HCCs in the same
coefficient estimation group that are not also in a hierarchical
relationship. This situation occurred in no more than 0.1 percent of
enrollees sampled for 2017 and 2018 HHS-RADV.
\208\ In section III.C.8.b. of this proposed rule, we propose
how the coefficient estimation group logic would be applied to
adult, child, and infant enrollees and discuss alternative
application methodologies.
\209\ In the application of the coefficient estimation group
logic to HHS-RADV, the definition of coefficient estimation groups
for the infant models depends upon proposals in section III.C.8.b.
of this proposed rule. If the approach in section III.C.8.b. is
finalized as proposed, Super HCCs for the infant models would be
based on the calculated model factors used for the infant models, as
described in the applicable benefit year's DIY software ``Additional
Infant Variables'' table logic (Table 8 of the 2021 Benefit Year DIY
Software). In section III.C.8.b. of this rule, we also briefly
describe alternative approaches wherein Super HCCs for infants would
be identical to those for the child models, or identical to those
for the adult models, and would involve additional steps analogous
to those described in Chapter 11.3.4 of the 2020 Benefit Year HHS-
RADV Protocols, available at https://www.regtap.info/uploads/library/2020_RADV_Protocols__042921_5CR_060421.pdf. These additional
steps would not be necessary if the Super HCCs proposals in this
rule to define Super HCCs separately for adults, children, and
infants are finalized as proposed.
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[[Page 635]]
If finalized as proposed, this update to the Super HCC policy would
necessitate a change to the policy finalized in the 2021 Payment Notice
\210\ which amended the outlier identification process to not consider
an issuer as an outlier in any failure rate group in which that issuer
has fewer than 30 HCCs.\211\ That policy was developed based on results
of analysis that showed that if the number of EDGE HCCs per sample of
enrollees was below 30 HCCs, the implied alpha of our statistical tests
for outliers was higher than our 5 percent target, thereby failing to
meet the threshold for statistical significance. Moreover, statistical
practice often relies on a standard recommendation regarding the
determination of sample size, which states that sample sizes below 30
observations are often insufficient to assume that the sampling
distribution is normally distributed.\212\
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\210\ 85 FR at 29196 through 29198.
\211\ Under the outlier identification policy finalized in the
2021 Payment Notice, data from an issuer who has fewer than 30 HCCs
in a failure rate group is included in the calculation of national
metrics for that failure rate group, including the national mean
failure rate, standard deviation, and upper and lower confidence
interval bounds. However, the issuer does not have its risk score
adjusted for that group, even if the magnitude of its failure rate
appeared to otherwise be very large relative to other issuers. In
addition, we clarified that this issuer may be considered an outlier
in other failure rate groups in which it has 30 or more HCCs.
\212\ For example, David C. Howell, ``Hypothesis Tests Applied
to Means'' In Statistical Methods for Psychology (8th Ed.), 177-228.
Belmont, CA: Wadsworth, 2010.
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The 2021 Payment Notice policy was developed when individual HCCs
were the unit of analysis for calculating failure rates. However, the
proposed policy in this rule to de-duplicate coefficient estimation
groups in HHS-RADV would alter the unit of analysis of failure rates to
be de-duplicated Super HCCs,\213\ rather than individual HCCs. Although
the unit of analysis would have changed, the underlying issue with
sample size in the outlier identification process would remain the
same. As such, as a part of this proposal, we propose to generally
maintain the outlier identification approach adopted in the 2021
Payment Notice and propose to not consider an issuer as an outlier in
any failure rate group in which that issuer has fewer than 30 de-
duplicated EDGE Super HCCs (which would include, as proposed below,
maturity-severity factors for infant enrollees) beginning with 2021
benefit year HHS-RADV. Consistent with the policies adopted in the 2021
Payment Notice,\214\ we also propose to continue to include data from
an issuer who has fewer than 30 de-duplicated EDGE Super HCCs in a
failure rate group in the calculation of national metrics for that
failure rate group, including the national mean failure rate, standard
deviation, and upper and lower confidence interval bounds. However, the
issuer would not have its risk score adjusted for that group, even if
the magnitude of its failure rate appeared to otherwise be very large
relative to other issuers. In addition, we clarify that under this
proposal this issuer may be considered an outlier in other failure rate
groups in which it has 30 or more de-duplicated EDGE Super HCCs.
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\213\ If the approach in section III.C.8.b. is finalized as
proposed, Super HCCs for the infant models would be based on the
calculated model factors used for the infant models, as described in
the applicable benefit year's DIY software ``Additional Infant
Variables'' table logic (Table 8 of the 2021 Benefit Year DIY
Software). In section III.C.8.b. of this rule, we also briefly
describe alternative approaches under which Super HCCs for infants
would be identical to those for the child models, or identical to
those for the adult models, and would involve additional steps
analogous to those described in Chapter 11.3.4 of the 2020 Benefit
Year HHS-RADV Protocols (available at). These additional steps would
not be necessary if the Super HCCs proposals in this rule proposed
to define Super HCCs separately for adults, children, and infants
are finalized as proposed.
\214\ 85 FR at 29196 through 29198.
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We seek comment on this proposal and whether HCCs in coefficient
estimation groups should be de-duplicated before they are sorted into
failure rate groups and in all subsequent stages of HHS-RADV error
estimation.
b. Defining Super HCCs Separately for Adults, Children, and Infants
In conjunction with our proposal to modify the application of
coefficient estimation groups in section III.C.8.a. of this proposed
rule, we also propose to modify the Super HCC policy to apply
coefficient estimation groups to enrollees according to the risk
adjustment model to which they are subject. Under the current Super HCC
policy, coefficient estimation group logic from the adult models is
applied to all enrollees, including those subject to the child and
infant models.\215\ As detailed in the 2020 HHS-RADV Amendments Rule,
we adopted this approach because the adult models' HCC coefficient
estimation groups will be applicable to the vast majority of enrollees
\216\ and our belief that the use of HCC coefficient estimation groups
present in the adult risk adjustment models sufficiently balances the
representativeness and accuracy of HCC failure rate estimates across
the entire population in aggregate.\217\
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\215\ See 85 FR at 76984 through 76900.
\216\ The majority of the population with HCCs in the HHS-RADV
samples are subject to the adult models (88.3 percent for the 2017
benefit year; 88.7 percent for the 2018 benefit year). For 2017,
this was calculated after removing issuers in Massachusetts and
incorporating cases where issuers failed pairwise and the SVA
subsample was used.
\217\ See 85 FR at 76987.
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However, there are some differences in the structure of the risk
adjustment model coefficient estimation groups between the adult,
child, and infant models that the current approach does not take into
account. For example, the child and adult risk adjustment models'
coefficient estimation groups for the 2021 benefit year and onward
\218\ are almost identical with the exception of two adult-only
coefficient estimation groups and five child-only coefficient
estimation groups (Table 9).
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\218\ Starting in 2021 benefit year, the HHS risk adjustment
models use Version 07 for the HHS-HCC classification. Prior to the
2021 benefit year, the HHS risk adjustment models used Version 05
for HHS-HCC classification.
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The infant models also are composed of variables that function
analogously to coefficient estimation groups in that they can represent
the presence of a large number of HCCs, or just a single HCC. However,
these variables in the infant models, the severity-maturity interaction
factors, are structured completely differently from the coefficient
estimation groups in the adult and child models. We have continued to
consider these issues as we gained more experience with operating HHS-
RADV and had access to additional years of HHS-RADV data to analyze.
In recognition of the differences in each age group model's
definitions, and based on the results of further analysis on the year-
over-year stability of sorting Super HCCs into three failure rate
groups, described below, we propose to define Super HCCs as:
The HCC-derived adult model variables after the
application of the relevant rows in the applicable benefit year's DIY
software adult variable logic (for example, for 2021 HHS-RADV, in the
2021 Benefit Year DIY Software,\219\ the ``HCC group'' rows in Table 6:
Additional Adult Variables),
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\219\ See, for example, the August 3, 2021 version of the DIY
software is available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
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The HCC-derived child model variables after the
application of the relevant rows in the applicable benefit year's DIY
software child variable logic (for example, for 2021 HHS-RADV, in the
2021 Benefit Year DIY Software, the ``HCC group'' rows in Table 7:
Additional Child Variables), and
The HCC-derived infant model variables after the
application of the relevant rows in the applicable benefit year's DIY
software infant variable logic (for example, for 2021 HHS-RADV, in the
2021 Benefit Year DIY Software, the ``Severity level'', ``Maturity
level'', ``Assign as IHCC AGE1 if needed'', ``Impose hierarchy'', and
``Maturity x severity level interactions'' rows in Table 8: Additional
Infant Variables). Under this approach, we would sort the adult and
child coefficient estimation groups into failure rate groups together,
when they are identical in definition between the adult and child
models, and independently from one another when they are not identical.
For infant enrollees, rather than have individual HCCs sorted into
failure rate groups, or use the adult or child coefficient estimation
group (Super HCC) definitions, we would sort the infant enrollees'
maturity-severity level interaction factors themselves into failure
rate groups as Super HCCs after they have been de-duplicated. In short,
for the risk adjustment models for 2021 benefit year and onward, using
each age group's model factors to define Super HCCs, and sorting adult
and child Super HCCs together when they have identical definitions,
would increase the number of factors used in sorting from 110 under the
current Super HCC grouping policy established in the 2020 RADV
Amendments Rule to 146 under this approach. We propose to adopt these
changes to the Super HCC policy beginning with the 2021 benefit year of
HHS-RADV.
When we established the current Super HCC grouping policy in the
2020 HHS-RADV Amendments Rule,\220\ we acknowledged the possibility of
defining Super HCCs based on each model separately. Nevertheless, we
proposed and finalized Super HCCs based on only the adult models due to
concerns that using the child and infant models separately would result
in some infant model Super HCCs with very small sample sizes, leading
to less stable failure rate group assignments year-over-year. We also
finalized a policy to use the adult models to create Super HCCs because
the adult models' HCC coefficient estimation groups will be applicable
to the vast majority of enrollees (including most children, considering
the strong overlap between the structure of the adult and child models)
and our belief that the use of HCC coefficient estimation groups
present in the adult risk adjustment models sufficiently balances the
representativeness and accuracy of HCC failure rate estimates across
the entire population in aggregate. However, simulations run using 2018
HHS-RADV data \221\ have shown that if we were to use each model's
factor definitions separately as proposed in this rule, with adult and
child coefficient estimation groups that have identical definitions
being sorted together, we would expect 93.4 percent of factors for one
benefit year of HHS-RADV to be sorted into the same failure rate group
for the subsequent benefit year of HHS-RADV. Similarly, according to
our simulation of 1,000 subsequent years of HHS-RADV, if we were to
base Super HCCs on the adult models for adults and the child models for
children and infants, the percentage of factors whose sorting would
remain stable between subsequent years would be 93.2 percent. In
contrast, and contrary to expectations, if Super HCCs were only based
on the definitions in the adult
[[Page 638]]
models, we would expect only 91.4 percent of factors to remain in the
same failure rate group across subsequent benefit years.
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\220\ See 85 FR at 76984-76900.
\221\ The 2018 risk adjustment models, to which the 2018 HHS-
RADV data were subject, were based on the V05 HHS-HCC classification
for the HHS risk adjustment models, which is the version of the HHS-
HCC classification that applies through the 2020 benefit year. The
2021 risk adjustment models, to which the 2021 HHS-RADV data will be
subject, were based on the V07 HHS-Condition Categories, which
applies for the 2021 benefit year and beyond.
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This analysis demonstrates that the very small sample sizes for
enrollees subject to the infant models would not lead to more overall
instability if the Super HCC policy was modified to use each age
group's model factor definitions separately, except for where child and
adult coefficient estimation groups have identical definitions, to
define Super HCCs. In fact, our continued study of these issues found
that using each model's factor definitions separately, except for where
child and adult coefficient estimation groups have identical
definitions, to define Super HCCs could provide more stability than
using only the adult models, or a combination of the child and adult
models. In addition, we note that beginning with the 2021 benefit year,
the risk adjustment models were updated based on Version 07 (V07) of
the HHS-HCC classification.\222\ When the Super HCC policy was first
implemented in the 2020 HHS-RADV Amendments Rule,\223\ the risk
adjustment models for the earliest HHS-RADV benefit years to which the
policy was effective (HHS-RADV benefit years 2019 and 2020) were based
on Version 05 (V05) of the HHS-HCC classification.\224\ Due to the
change in the HHS-HCC hierarchies in the V07 classification,\225\ the
structure of the coefficient estimation groups for the child models for
the 2021 benefit year and beyond differs further from the structure of
the coefficient estimation groups for the adult models than it did for
the 2019 and 2020 benefit years. For these reasons, we are proposing to
define Super HCCs based on each age group's model factor definitions
separately, except for where child and adult coefficient estimation
groups have identical definitions, as described in the relevant rows in
the applicable benefit year's DIY software adult variable logic (for
example, for 2021 HHS-RADV, in the 2021 Benefit Year DIY Software,\226\
the ``HCC group'' rows in Table 6: Additional Adult Variables), the
relevant rows in the applicable benefit year's DIY software child
variable logic (for example, for 2021 HHS-RADV, in the 2021 Benefit
Year DIY Software, the ``HCC group'' rows in Table 7: Additional Child
Variables), and the relevant rows in the applicable benefit year's DIY
software infant variable logic (for example, for 2021 HHS-RADV, in the
2021 Benefit Year DIY Software, the ``Severity level'', ``Maturity
level'', ``Assign as IHCC AGE1 if needed'', ``Impose hierarchy'', and
``Maturity x severity level interactions'' rows in Table 8: Additional
Infant Variables).
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\222\ 85 FR 29164.
\223\ See 85 FR 76984-76990.
\224\ See Table 4 of the 2019 DIY software tables, available at
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/DIY-Tables-2019.04.2020.xlsx. See also Table 4 of the 2020
DIY software tables, available at https://www.cms.gov/files/document/hhs-hcc-software-v0520128q2-tables-04132021.xlsx.
\225\ For a discussion of these changes, see 85 FR at 7098-7101
and 85 FR at 29175-29185. Also see the Potential Updates to HHS-HCCs
for the HHS-operated Risk Adjustment Program (June 17, 2019),
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Potential-Updates-to-HHS-HCCs-HHS-operated-Risk-Adjustment-Program.pdf.
\226\ The August 3, 2021 version of the DIY software is
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance.
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These relevant rows of the applicable benefit year's DIY software
tables would be applied such that each instance of a Super HCC is only
counted once per enrollee, even if that enrollee has multiple HCCs in
that Super HCC. Furthermore, any payment HCCs that are not modified by
the DIY software table logic rows referenced above would be treated as
individual Super HCCs, such that all Super HCCs are aligned with how
their component HCCs are treated in the risk adjustment models for the
applicable benefit year. We propose to apply this change beginning with
the 2021 benefit year of HHS-RADV.
We seek comment on these proposals and whether Super HCCs should
continue to be defined for all enrollees based on only the adult
models,\227\ should be defined for adult enrollees based on the adult
models and for child and infant enrollees based on the child
models,\228\ or should be defined for each age group according to the
age group risk adjustment model to which they are subject, as proposed.
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\227\ If this alternative approach is adopted, for infant
enrollees, Super HCCs would not align with the structure of the
infant risk adjustment models, as such the HHS-RADV process would
involve additional steps analogous to those described in Chapter
11.3.4 of the 2020 Benefit Year HHS-RADV Protocols (available at
https://www.regtap.info/uploads/library/2020_RADV_Protocols__042921_5CR_060421.pdf). The additional steps
described in Chapter 11.3.4 of the 2020 Benefit Year HHS-RADV
Protocols would not be necessary if the Super HCCs proposals in this
rule are finalized as proposed such that infant enrollee Super HCCs
are based on the calculated model factors used for the infant
models.
\228\ Ibid.
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c. Negative Failure Rate Constraint
In the 2020 HHS-RADV Amendments Rule,\229\ we finalized a policy to
constrain outlier issuers' error rate calculations to zero in cases
when an issuer is a negative error rate outlier and its failure rate is
negative, beginning with 2019 benefit year HHS-RADV. We finalized this
policy in order to distinguish between low failure rates due to
accurate data submission and failure rates that have been depressed
through the presence of HCCs in the audit data that were not present in
the EDGE data. If a negative failure rate is due to a large number of
found HCCs, it does not reflect accurate reporting through the EDGE
server for risk adjustment.
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\229\ 85 FR at 76994-76998.
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In this rule, we propose modifying the application of that policy
beginning with the 2021 benefit year of HHS-RADV to constrain to zero
the failure rate of any issuer who is a negative failure rate outlier
in a failure rate group, regardless of whether the outlier issuer has a
negative or positive error rate. We believe this proposed policy is
appropriate and necessary to account for the fact that, because there
are three failure rate groups in HHS-RADV, it is possible for a
positive error rate outlier issuer to have a negative failure rate in
one failure rate group and a positive failure rate in another failure
rate group. To address those cases, we propose to amend the application
of the negative failure rate constraint policy such that, for the
purposes of calculating the group adjustment factor (GAF), we would
constrain to zero the failure rate of any failure rate group in which
an issuer is a negative failure rate outlier, regardless of whether the
outlier issuer has an overall negative or positive error rate. We
propose to adopt this policy beginning with the 2021 benefit year HHS-
RADV. Although our experience to date leads us to believe that this
scenario is unlikely to occur often, this refinement is consistent with
the intent of the policy to reduce potential incentives for issuers to
use HHS-RADV to identify more HCCs than were reported to their EDGE
servers for an applicable benefit year.
We seek comment on this proposal.
9. Disbursement of Recouped High-Cost Risk Pool Funds--Discrepancies of
Issuers of Risk Adjustment Covered Plans (Sec. 153.710(d))
HHS proposes that any funds recouped as a result of an actionable
high-cost risk pool-related discrepancy under Sec. 153.710(d) would be
used to reduce high cost-risk pool charges for that national high-cost
risk pool for the current benefit year if high-cost risk pool payments
have not already been calculated for that benefit year. If high-cost
risk pool payments have already been calculated for that benefit year,
we propose to use the high-cost risk pool funds recouped based on an
actionable
[[Page 639]]
discrepancy to reduce the next applicable benefit year's high-cost risk
pool charges for all issuers owing high-cost risk pool charges for that
national high-cost risk pool. As elsewhere discussed in this preamble,
under ``High-Cost Risk Pool Funds--Audits of Issuers of Risk Adjustment
Covered Plans (Sec. 153.620(c))'' and ``Disbursement of Recouped High-
Cost Risk Pool Funds--Administrative Appeals of Issuers of Risk
Adjustment Covered Plans (Sec. 156.1220),'' we also propose similar
disbursement policies for high-cost risk pool funds HHS recoups as a
result of audits of risk adjustment covered plans under Sec.
153.620(c)(5)(ii) and successful administrative appeals under Sec.
156.1220(a)(1)(ii). We propose to treat funds recouped as a result of
an actionable high-cost risk pool-related discrepancy the same way.
That is, the recouped discrepancy funds would be used to reduce high-
cost risk pool charges for that market for the next benefit year for
which high-cost risk pool payments have not already been calculated. We
also clarify that when HHS recoups high-cost risk pool funds as a
result of an actionable discrepancy, the issuer that filed the
discrepancy would then be responsible for reporting that adjustment to
its high-cost risk pool payments or charges in the next MLR reporting
cycle consistent with the applicable instructions in Sec. 153.710(h).
Additionally, for any benefit year in which high-cost risk pool charges
are reduced as a result of high-cost risk pool funds recouped as a
result of an actionable discrepancy, issuers whose charge amounts are
reduced would be required to report the high-cost risk pool charges
paid for that benefit year net of recouped audit funds in the next MLR
reporting cycle consistent with Sec. 153.710(h).
We seek comment on this proposal.
10. Medical Loss Ratio Reporting Requirements (Sec. 153.710(h))
HHS established a framework in prior rulemakings to guide issuer
treatment of certain payments and charges that could be subject to
reconsideration for purposes of risk corridors and MLR reporting.\230\
For example, because risk adjustment transfer amounts are factors in an
issuer's MLR calculations, a delay in resolving final risk adjustment
payments and charges, including HHS-RADV adjustments to transfers,
could make it difficult for issuers to comply with reporting
requirements under the MLR program. A delay in resolving final risk
adjustment transfer amounts could occur due to audits, actionable
discrepancies, or successful appeals. Therefore, we clarified in Sec.
153.710(h) \231\ how issuers should report certain ACA program amounts
that could be subject to reconsideration for risk corridors and MLR
reporting purposes. In this rule, we propose to amend the introductory
sentence in Sec. 153.710(h)(1) and to add a proposed new paragraph
(h)(1)(v) to separately address and explicitly capture a reference to
HHS-RADV adjustments to make clear that HHS expects issuers to report
HHS-RADV adjustments as part of their MLR reports in the same manner as
they report risk adjustment payment and charge amounts (including high-
cost risk pool payments and charges). That is, notwithstanding any HHS-
RADV discrepancy filed under Sec. 153.630(d)(2), or any HHS-RADV
request for reconsideration under Sec. 156.1220(a)(1)(vii) and (viii),
unless the dispute has been resolved, issuers must report, as
applicable, the HHS-RADV adjustment to a risk adjustment payment or
charge as calculated by HHS in the applicable benefit year's Summary
Report of Benefit Year Risk Adjustment Data Validation Adjustments to
Risk Adjustment Transfers.\232\ We also propose to add a reference to
HHS-RADV discrepancies under Sec. 153.630(d)(2) to the introductory
sentence in Sec. 153.710(h)(1).
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\230\ See 45 CFR 153.710(h). Also see 79 FR at 13789-13790 and
81 FR at 12235-12236.
\231\ These instructions were previously codified in 45 CFR
153.710(g) and recently redesignated to 45 CFR 153.710(h). See 79 FR
at 13789-13790 and 86 FR at 24194-24195.
\232\ See Table 9 in the part 2 of the 2022 Payment Notice, 86
FR at 24201. For example, the 2019 and 2020 benefit year HHS-RADV
Summary Report for non-exiting issuers will be published in early
summer of 2022 and those issuers would be expected to report those
amounts in their 2021 MLR Reports (filed by July 31, 2022).
---------------------------------------------------------------------------
We propose conforming amendments to paragraph (h)(2) to add a
reference to HHS-RADV adjustments to address situations where there
could be subsequent changes to HHS-RADV adjustments calculated by HHS
in the applicable benefit year's HHS-RADV Summary Report of Benefit
Year Risk Adjustment Data Validation Adjustments to Risk Adjustment
Transfers, such as modifications resulting from an actionable
discrepancy or successful appeal. In these situations, an issuer would
be required to report during the current MLR reporting year any
adjustment to an HHS-RADV adjustment made or approved by HHS before
August 15, or the next applicable business day, of the current
reporting year unless otherwise instructed by HHS. Issuers would be
required to report any adjustment to an HHS-RADV adjustment made or
approved by HHS where such adjustment has not been accounted for in a
prior MLR Reporting Form, in the following reporting year. For example,
if an issuer's successful administrative appeal results in changes to
HHS-RADV adjustments for a state market risk pool and issuers in that
state market risk pool are notified of those modifications in
September, those issuers would be required to report these adjusted
amounts in the next MLR reporting cycle, after the appeal has been
resolved and they receive notice of the adjusted amounts. However, if
an appeal is resolved and issuers are notified about modifications to
HHS-RADV adjustments for a given benefit year as a result of that
appeal before August 15, or the next applicable business day, those
issuers must report the adjusted amounts in the current MLR reporting
year.
Recognizing that flexibility is often needed in reporting these
amounts on MLR forms, consistent with existing framework in Sec.
153.710(h)(3), HHS would have the ability to modify these instructions
in guidance in cases where HHS reasonably determines that these
reporting instructions would lead to unfair or misleading financial
reporting. Our intent in issuing any such guidance would be to avoid
having the application of the instructions in exceptional circumstances
lead to unfair or misleading financial reporting.\233\
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\233\ See, for example, Treatment of Risk Corridors Recovery
Payments in the Medical Loss Ratio and Rebate Calculations (December
30, 2020), available at https://www.cms.gov/files/document/mlr-guidance-rc-recoveries-and-mlr-final.pdf.
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Finally, we propose a technical amendment to Sec. 153.710(h)(3) to
replace the current cross-reference to paragraph (g)(1) and (2) of this
section with a reference to paragraph (h)(1) and (2) of this section to
point to the correct sections that contain the relevant reporting
instructions. We inadvertently omitted this update as part of the
amendments in the 2022 Payment Notice to incorporate an EDGE
materiality threshold as part of Sec. 153.710 that redesignated the
risk corridors and MLR reporting instructions provisions from paragraph
(g) to paragraph (h).\234\
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\234\ See 85 FR at 78604-78605 and 86 FR at 24194-24195.
---------------------------------------------------------------------------
We seek comments on these proposals.
11. Deadline for Submission of Data (Sec. 153.730)
A risk adjustment covered plan must submit data to HHS in states
where HHS is operating the risk adjustment program that is necessary
for HHS to calculate
[[Page 640]]
risk adjustment payments and charges.235 236 In the 2014
Payment Notice, HHS established that the deadline for issuers to submit
the required risk adjustment data is April 30 of the year following the
applicable benefit year.\237\ For example, the deadline for issuers of
risk adjustment covered plans to submit the required 2020 benefit year
risk adjustment data was April 30, 2021. HHS explained that this
deadline provides ample time to allow for claims run-out from the prior
benefit year to ensure that diagnoses for the benefit year are
captured, while also providing HHS sufficient time to calculate
payments and charges and meet the June 30 deadline for notifying
issuers of risk adjustment transfer amounts at Sec. 153.310(e).\238\
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\235\ See 45 CFR 153.610 and 153.710. Since the 2017 benefit
year, HHS has operated the risk adjustment program in all 50 states
and the District of Columbia.
\236\ Issuers of reinsurance-eligible plans in states where HHS
operated the reinsurance program were similarly required to submit
the data necessary for HHS to calculate reinsurance payments. See,
for example, 45 CFR 153.420 and 153.710. The reinsurance program
under section 1341 of the ACA was a temporary program that applied
to the 2014-2016 benefit years. The risk adjustment program under
section 1343 of the ACA is a permanent program and therefore is the
primary focus of this discussion.
\237\ See 78 FR 15410 at 15434.
\238\ Ibid.
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We are not proposing to change this deadline but propose to amend
Sec. 153.730 to address situations when April 30 does not fall on a
business day. Currently, when April 30 falls on a non-business day, HHS
has exercised enforcement discretion to extend the deadline to the next
applicable business day.\239\ This occurred in the past for the 2016
and 2017 benefit year data submissions and will occur again for the
2022 benefit year data submissions. Recognizing there will be future
benefit years when April 30 does not fall on a business day, HHS
proposes to amend Sec. 153.730 to provide that when April 30 of the
year following the applicable benefit year falls on a non-business day,
the deadline for issuers to submit the required risk adjustment data
would be the next applicable business day. We solicit comments on this
proposal.
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\239\ See 81 FR 12204 at 12234 n.20; see also Evaluation of EDGE
Data Submissions for 2016 Benefit Year at 1 (Dec. 23, 2016),
available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/EDGE-2016-Q_Q-Guidance_20161222v1.pdf.
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D. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Non-Interference With Federal Law and Non-Discrimination Standards
(Sec. 155.120(c))
We propose to amend 45 CFR 155.120(c) such that its
nondiscrimination protections would explicitly prohibit discrimination
based on sexual orientation and gender identity. HHS previously
codified such nondiscrimination protections at Sec. 155.120(c), but
amendments made in 2020 to Sec. 155.120(c) removed any reference to
sexual orientation and gender identity. If finalized, this proposal
would revert Sec. 155.120(c) to the pre-2020 nondiscrimination
protections.
Section 155.120(c) currently provides that in order to avoid
interference and comply with applicable non-discrimination statutes,
the states and the Exchanges must not discriminate based on race,
color, national origin, disability, age, or sex. Previously, in the
final rule ``Patient Protection and Affordable Care Act; Establishment
of Exchanges and Qualified Health Plans; Exchange Standards for
Employers'' (Exchange Standards final rule), pursuant to the authority
provided in section 1321(a)(1)(A) of the ACA to regulate the
establishment and operation of an Exchange, we finalized Sec.
155.120(c) to also prohibit discrimination based on sexual orientation
and gender identity.\240\ However, in the 2020 final rule related to
section 1557 of the ACA, HHS revised certain CMS regulations, including
those at Sec. 155.120(c), by removing sexual orientation and gender
identity as bases of discrimination subject to the CMS regulations'
nondiscrimination protections.\241\
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\240\ 77 FR 18310 (March 27, 2012).
\241\ 85 FR 37160 (June 19, 2020). See also id. at 37218-21 (the
2020 section 1557 final rule revised the following CMS regulations:
45 CFR 147.104, 155.120, 155.220, 156.200, and 156.1230).
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CMS possesses statutory authority independent of section 1557 of
the ACA to prohibit discrimination in Exchanges pursuant to the
authority to establish requirements with respect to the operation of
Exchanges in section 1321(a)(1)(A) of the ACA.\242\ Pursuant to this
authority, HHS finalized in the Exchange Standards final rule that a
State must comply with any applicable non-discrimination statutes,
specifically finalizing that a State must not operate an Exchange in
such a way as to discriminate on the basis of race, color, national
origin, disability, age, sex, gender identity, or sexual orientation.
CMS proposes to exercise that same authority here to amend Sec.
155.120(c) to again prohibit states and Exchanges carrying out Exchange
requirements from discriminating based on sexual orientation and gender
identity. Section 1321(a)(1)(A) of the ACA is the same authority CMS
relies upon for implementation of existing nondiscrimination
protections at Sec. 155.120(c). Utilizing this same authority to again
prohibit discrimination based on sexual orientation and gender identity
at Sec. 155.120(c) would be consistent with the authority CMS relies
upon for the existing protections at Sec. 155.120(c) that currently
prohibit discrimination on the basis of race, color, national origin,
disability, age, or sex. We believe such amendments are warranted in
light of the existing trends in health care discrimination and are
necessary to better address barriers to health equity for LGBTQI+
individuals.
---------------------------------------------------------------------------
\242\ 85 FR 37218-21 (June 19, 2020).
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A more in-depth discussion of these developments and other factors
considered in proposing these amendments to CMS nondiscrimination
protections is included earlier in the preamble to Sec. 147.104 under
section III.B.1.b. of this preamble. For brevity, we refer back to
Sec. 147.104 under section III.B.1.b. of the preamble rather than
restating the issues here.
We seek comment on this proposal.
3. Civil Money Penalties for Violations of Applicable Exchange
Standards by Consumer Assistance Entities in Federally-Facilitated
Exchanges (Sec. 155.206)
We propose to make a technical correction to 45 CFR 155.206(i) to
add language that would cross-reference to the authority to implement
annual inflation-related increases to civil money penalties (CMPs)
pursuant to the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015 (2015 Act).\243\ Because of an oversight, this
language was not added to Sec. 155.206(i) as part of prior efforts and
rulemaking to implement the 2015 Act.\244\ Additionally, a reference to
Sec. 155.206 and any accompanying CMP amounts have not been included
in HHS's annual inflation update
[[Page 641]]
rulemakings.\245\ Therefore, in this rule, we propose to amend Sec.
155.206(i) to add the phrase ``as adjusted annually under 45 CFR part
102'' after the phrase ``$100 for each day'' in order to correct this
oversight. The associated CMP table in 45 CFR 102.3 is updated
annually, and Sec. 155.206(i) will be included in the next annual
update. To date, no CMPs have been imposed under this authority, but
any that are will reflect the current inflationary adjusted amount as
required by the 2015 Act and will be calculated in accordance with
applicable OMB guidance to all Executive Departments on the
implementation of the 2015 Act.
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\243\ Sec. 701 of the Bipartisan Budget Act of 2015, Public Law
114-74, which amended the Federal Civil Penalties Inflation
Adjustment Act of 1990, Public Law 101-410, 104 Stat. 890 (1990).
\244\ See, e.g., Department of Health and Human Services;
Adjustment of Civil Monetary Penalties for Inflation; Interim Final
Rule, 81 FR 61538 (Sept. 6, 2016), available at https://www.govinfo.gov/content/pkg/FR-2016-09-06/pdf/2016-18680.pdf.
\245\ See, e.g., the Department of Health and Human Services;
Annual Civil Monetary Penalties Inflation Adjustment; Final Rule, 85
FR 2869 (Jan. 17, 2020), available at https://www.govinfo.gov/content/pkg/FR-2020-01-17/pdf/2020-00738.pdf. See also the
Department of Health and Human Services; Adjustment of Civil
Monetary Penalties for Inflation and the Annual Civil Monetary
Penalties Inflation Adjustment for 2021, 86 FR 62928 (Nov. 15,
2021), available at https://www.govinfo.gov/content/pkg/FR-2021-11-15/pdf/2021-24672.pdf and 45 CFR 102.3.
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4. Ability of States To Permit Agents and Brokers and Web-Brokers To
Assist Qualified Individuals, Qualified Employers, or Qualified
Employees Enrolling in QHPs (Sec. 155.220)
a. Required QHP Comparative Information on Web-Broker Websites and
Related Disclaimer
We propose to amend Sec. 155.220(c)(3)(i)(A) to include at
proposed new Sec. Sec. 155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(5)
a list of the QHP comparative information web-broker non-Exchange
websites are required to display consistent with Sec. 155.205(b)(1).
We also propose to revise the disclaimer requirement in Sec.
155.220(c)(3)(i)(A) so that web-broker non-Exchange websites would be
required to prominently display a standardized disclaimer provided by
HHS stating that enrollment support is available on the Exchange
website and provide a web link to the Exchange website where enrollment
support for a QHP is not available using the web-broker's non-Exchange
website.
Currently, Sec. 155.220(c)(3)(i)(A) requires that a web-broker
non-Exchange website must disclose and display all QHP information
provided by the Exchange or directly by QHP issuers consistent with the
requirements of Sec. 155.205(b)(1) and (c). To the extent that not all
information required under Sec. 155.205(b)(1) is displayed on the web-
broker's website for a QHP, the web-broker's website must prominently
display a standardized disclaimer provided by HHS stating that
information required under Sec. 155.205(b)(1) for the QHP is available
on the Exchange website, and provide a link to the Exchange website.
The preamble in the proposed \246\ and final \247\ rules that
established the current text in Sec. 155.220(c)(3)(i)(A) explained the
intent of this requirement was that a web-broker website must display
all information required under Sec. 155.205(b)(1) unless the
information was not available to the web-broker, in which case the web-
broker website must display the standardized disclaimer. Section
155.220(c)(3)(i)(D) similarly requires web-brokers to display all QHP
data provided by an Exchange on its non-Exchange website used to
participate in the FFE direct enrollment (DE) program (whether Classic
DE or enhanced direct enrollment (EDE)).
---------------------------------------------------------------------------
\246\ See 78 FR at 37046.
\247\ See 78 FR at 54077.
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In the early years of Exchange operations, we released a data file
with limited QHP details (the QHP limited file) that provided web-
brokers with a basic set of QHP information that could be used to
satisfy the display requirements. Display of the data elements from the
QHP limited file, in combination with a standardized disclaimer (the
plan detail disclaimer), became the de facto minimum required to
satisfy the web-broker's obligation to display QHP information on its
non-Exchange website. In adopting this approach, we recognized that the
Exchange may not have been able to provide web-brokers with certain
data elements necessary to meet the Sec. 155.205(b)(1) requirements,
such as premium information, due to confidentiality requirements, web-
broker appointments with QHP issuers, and state law. We also recognized
some of the data elements, such as quality rating information, were not
going to be available in the initial years of the Exchanges'
operation.\248\
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\248\ See Patient Protection and Affordable Care Act; Program
Integrity: Exchange, SHOP, and Eligibility Appeals; Final Rule, 78
FR 54069 at 54077 (August 30, 2013).
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In the proposed 2022 Payment Notice, we proposed to establish an
exception to the web-broker display requirements captured at paragraphs
(c)(3)(i)(A) and (D).\249\ We proposed to revise paragraph (c)(3)(i)(A)
to require a web-broker non-Exchange website to disclose and display
all QHP information provided by the Exchange or directly by QHP issuers
consistent with the requirements of Sec. 155.205(b)(1) and (c), except
when a web-broker's website does not support enrollment in a QHP. We
proposed a similar revision to Sec. 155.220(c)(3)(i)(D). A web-
broker's non-Exchange website may not support enrollment in a QHP if
the web-broker does not have an appointment with a QHP issuer and
therefore is not permitted under state law to enroll consumers in the
coverage offered by that QHP issuer. In such circumstances, we proposed
that the web-broker's non-Exchange website would not be required to
provide all the information identified under Sec. 155.205(b)(1).
Instead, we proposed to require web-brokers to display the following
limited, minimum information for such QHPs: Issuer marketing name, plan
marketing name, product network type, metal level, and premium and
cost-sharing information. To take advantage of this proposed
flexibility, we also proposed that web-broker non-Exchange websites
would be required to identify to consumers the QHPs, if any, for which
the web-broker websites did not facilitate enrollment by prominently
displaying the plan detail disclaimer provided by the Exchange. The
plan detail disclaimer explains that the consumer can get more
information about such QHPs on the Exchange website, and includes a
link to the Exchange website. We noted that we believed this proposal
struck an appropriate balance by recognizing that web-brokers may not
be permitted to assist with enrollments in QHPs for which they do not
have an appointment while still providing key information about all
QHPs on web-broker non-Exchange websites to allow consumers to window
shop and identify whether they may want to explore other QHP options.
We noted that it also would minimize burdens for web-brokers by not
requiring them to develop processes to display all of the required
comparative information listed in Sec. 155.205(b)(1) for those QHPs
for which they do not have an appointment to sell. We invited comments
on the proposed limited, minimum QHP details that would be required to
be displayed for those QHPs that the web-broker does not facilitate
enrollment in through its non-Exchange website. We sought comment on
whether to require display of any additional elements identified under
Sec. 155.205(b)(1) among the limited, minimum information, such as
summaries of benefits and coverage.\250\
---------------------------------------------------------------------------
\249\ See Patient Protection and Affordable Care Act; HHS Notice
of Benefit and Payment Parameters for 2022 and Pharmacy Benefit
Manager Standards; Updates to State Innovation Waiver (Section 1332
Waiver) Implementing Regulations; Proposed Rule, 85 FR 78572 at
78614 (December 4, 2020).
\250\ 45 CFR 155.205(b)(1) references the following comparative
QHP information: Premium and cost-sharing information, the summary
of benefits and coverage, metal level, results of enrollee
satisfaction surveys, quality ratings, medical loss ratio
information, transparency of coverage measures, and the provider
directory.
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[[Page 642]]
Almost all public comments received in response to the proposal in
the proposed 2022 Payment Notice advocated for requiring that web-
broker non-Exchange websites display more QHP information than the rule
proposed to require, even in cases in which the web-broker non-Exchange
website does not support enrollment in a QHP. The vast majority of
commenters either advocated for requiring web-broker non-Exchange
websites to display all available QHP information for all available
QHPs, or generally supported making it easier for consumers to obtain
comparative information for all available QHPs when consumers are using
web-broker non-Exchange websites. After consideration of the comments
received, we did not finalize the proposed amendments to Sec.
155.220(c)(3)(i)(A) and (c)(3)(i)(D). We agreed that the display of
more QHP information on web-broker non-Exchange websites is in the best
interest of consumers to aid them in comparing QHP options without
having to potentially navigate to multiple websites, consistent with
the views of a majority of commenters who advocated for requiring that
web-broker non-Exchange websites display all of the comparative
information listed in Sec. 155.205(b)(1). We also noted our belief
that requiring web-broker non-Exchange websites to display additional
QHP information is reasonable given that QHP information has been more
readily accessible for some time, both through public use files and the
Marketplace API.
As a result, we communicated in the preamble of part 2 of the 2022
Payment Notice final rule our intent, pending future rulemaking when
these issues could be further clarified, to limit our current use of
enforcement discretion that permits web-brokers to only display issuer
marketing name, plan marketing name, product network type, and metal
level for all available QHPs, beginning with the PY 2022 open
enrollment period.\251\ We stated that web-broker non-Exchange websites
would be required to display all QHP information consistent with Sec.
155.205(b)(1) and (c), with the exception of MLR information and
transparency of coverage measures under Sec. 155.205(b)(1)(vi) and
(vii), for all available QHPs, beginning with the PY 2022 open
enrollment period. We indicated we would not deem a web-broker non-
Exchange website out of compliance with Sec. 155.220(c)(3)(i)(A) and
(D) with respect to the display of MLR information and transparency of
coverage measures if the web-broker non-Exchange website displays the
other required standardized comparative information consistent with
Sec. 155.205(b)(1) and (c). We also explained that prior to the start
of the open enrollment period for PY 2022, if a web-broker's non-
Exchange website did not display all QHP information consistent with
the requirements of Sec. 155.205(b)(1) and (c), other than MLR
information and transparency of coverage measures, it would be required
to prominently display the plan detail disclaimer and provide a link to
the Exchange website. We noted that this interim approach did not
establish new requirements and instead represented a change in the
exercise of enforcement discretion regarding the standardized
comparative information web-brokers are required to display under
existing regulations following our consideration of comments on the
proposed changes to the web-broker QHP display requirements in the
proposed 2022 Payment Notice.
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\251\ See Patient Protection and Affordable Care Act; HHS Notice
of Benefit and Payment Parameters for 2022 and Pharmacy Benefit
Manager Standards; Final Rule, 86 FR 24140 at 24206 (May 5, 2021).
---------------------------------------------------------------------------
We now propose to revise Sec. 155.220(c)(3)(i)(A) to incorporate a
general requirement that web-broker non-Exchange websites display the
QHP comparative information from Sec. 155.205(b)(1), consistent with
our forecast in the preamble of part 2 of the 2022 Payment Notice final
rule.\252\ Specifically, we propose to codify new Sec. Sec.
155.220(c)(3)(i)(A)(1) through (5) to require web-broker websites to
display premium and cost-sharing information, the summary of benefits
and coverage established under section 2715 of the PHS Act;
identification of the metal level of the QHP as defined by section
1302(d) of the ACA or whether it is a catastrophic plan as defined by
section 1302(e) of the ACA; the results of the enrollee satisfaction
survey as described in section 1311(c)(4) of the ACA; quality ratings
assigned in accordance with section 1311(c)(3) of the ACA; and the
provider directory made available to the Exchange in accordance with
Sec. 156.230 as the minimum QHP comparative information web-broker
non-Exchange websites must display for all available QHPs. Including
this information within Sec. 155.220, instead of through a cross-
reference to Sec. 155.205(b)(1), would provide better clarity and ease
of reference and establish a list of required QHP comparative
information consistent with our current enforcement approach, which, as
discussed above, does not require the display of MLR information and
transparency of coverage measures.
---------------------------------------------------------------------------
\252\ Ibid.
---------------------------------------------------------------------------
In addition, we propose to modify the language in Sec.
155.220(c)(3)(i)(A) that served as the basis for the plan detail
disclaimer requirement to instead require web-broker non-Exchange
websites that do not support enrollment in all available QHPs to
provide notice to consumers of that fact, and direct consumers to the
Exchange website where they may obtain enrollment support. We propose
to revise Sec. 155.220(c)(3)(i)(A) to state that web-broker websites
must disclose and display the following QHP information provided by the
Exchange or directly by QHP issuers consistent with the requirements of
Sec. 155.205(c), and to the extent that enrollment support for a QHP
is not available using the web-broker's website, prominently display a
standardized disclaimer provided by HHS stating that enrollment support
for the QHP is available on the Exchange website, and provide a web
link to the Exchange website. Historically the plan detail disclaimer
served as the mechanism and visual cue to convey to consumers where
they may find additional information about particular QHPs and how they
may enroll in those QHPs (that is, using HealthCare.gov). However,
requiring the continued display of the plan detail disclaimer is
unnecessary and would be confusing as the plan detail disclaimer states
more information about QHPs is available on HealthCare.gov when in fact
web-broker non-Exchange websites will be displaying the same QHP
comparative information as HealthCare.gov.\253\ In the absence of the
plan detail disclaimer, the secondary function of conveying those QHPs
for which enrollment support is not available through the web-broker's
non-Exchange website and how consumers may obtain enrollment support is
lost. This proposal to modify the disclaimer requirement in Sec.
155.220(c)(3)(i)(A) to convey to consumers those QHPs for which a web-
broker website does not provide enrollment support and to direct them
to where they can obtain enrollment support would serve the function
lost by
[[Page 643]]
the elimination of the plan detail disclaimer requirement.
---------------------------------------------------------------------------
\253\ The Plan Detail Disclaimer states: ``[Name of Company]
isn't able to display all required plan information about this
Qualified Health Plan at this time. To get more information about
this Qualified Health Plan, visit the Health Insurance
Marketplace[supreg] website at HealthCare.gov.'' See p.53 Federally-
Facilitated Exchanges (FFEs) and Federally-Facilitated Small
Business Health Options Program (FF-SHOP) Enrollment Manual, section
5.3.2, August 18, 2021, available at https://www.regtap.info/uploads/library/ENR_FFEFFSHOPEnrollmentManual2020_5CR_090220.pdf
https://www.cms.gov/files/document/ffeffshop-enrollment-manual-2021.pdf.
---------------------------------------------------------------------------
We seek comment on these proposals.
b. Prohibition of QHP Advertising on Web-Broker Websites
Section 155.220(c)(3)(i)(L) prohibits web-broker non-Exchange
websites from displaying QHP recommendations based on compensation an
agent, broker, or web-broker receives from QHP issuers. We propose to
amend Sec. 155.220(c)(3)(i)(L) to make clear that web-broker non-
Exchange websites are also prohibited from displaying QHP
advertisements, or otherwise providing favored or preferred placement
in the display of QHPs, based on compensation agents, brokers, or web-
brokers receive from QHP issuers. We have observed a web-broker
marketing to QHP issuers on its website the option for their QHPs to
receive ``preferred placement'' on the web-broker website for a fee.
The marketing materials indicated preferred placement on the web-
broker's website would position selected QHPs at the forefront of the
user experience on the website. The marketing materials also suggested
that users would not be made aware that preferred plan placements were
purchased for a fee, and such placements were not assigned based on the
specific attributes of the plans in relation to other available plans
for which issuers did not purchase preferred placement.
We believe QHP advertising on web-broker websites, whether or not
characterized as such or using other terms such as ``preferred
placement,'' is not in the best interest of consumers. QHP
advertisements on web-broker websites could be perceived by consumers,
and agents and brokers assisting consumers, as permissible QHP
recommendations by the web-broker based on the best interests of the
consumer rather than on the basis of payment from the QHP issuer to the
web-broker. Consumers, and agents and brokers assisting consumers, may
also inadvertently perceive advertisements placing a QHP in a favored
position on a web-broker's website as the result of a neutrally applied
filter of all available QHPs. These risks are substantially increased
if the advertisements are not clearly identified as advertisements.
However, even if QHP advertisements are clearly identified, we believe
it is not in the interest of consumers to allow them on web-broker
websites. In light of the many different approaches to advertising that
exist now or may be adopted in the future, we do not believe that
attempting to identify which advertising practices are permissible and
which are not is practical or sufficiently protective of consumers'
interests. Advertising is intended to bias consumer, agent, or broker
perceptions in a way that benefits the advertiser, rather than the
consumer or client. QHP advertisements on web-broker websites could
take forms other than favored or preferred placement among a list of
other QHPs (for example, obscuring the availability of other QHPs),
including forms that could be more confusing or deceptive to consumers,
in particular those consumers who may have limited familiarity with
health insurance products and terminology and may be easily misled by
advertising claims.
Although Sec. 155.220(c)(3)(i)(L) prohibits web-broker websites
from displaying QHP recommendations based on compensation an agent,
broker, or web-broker receives from QHP issuers, it does not explicitly
prohibit QHP advertising, or otherwise providing favored or preferred
placement in the display of QHPs, based on compensation an agent,
broker, or web-broker receives from QHP issuers. Therefore, we propose
to amend Sec. 155.220(c)(3)(i)(L) to make clear that when a web-broker
website is used to complete the QHP selection, the website must not
display QHP advertisements or recommendations, or otherwise provide
favored or preferred placement in the display of QHPs, based on
compensation the agent, broker, or web-broker receives from QHP
issuers. For purposes of this proposal, we intend for advertisements to
include any form of marketing or promotion of QHPs based on
compensation from QHP issuers, as opposed to the application of a
neutral filter or sorting methodology that may promote particular QHPs
and that are not based on compensation an agent, broker, or web-broker
receives from QHP issuers.
We seek comment on this proposal.
c. Explanation of Rationale for QHP Recommendations on Web-Broker
Websites
We propose to amend Sec. 155.220 to add a proposed new paragraph
(c)(3)(i)(M) that would require web-broker websites to prominently
display a clear explanation of the rationale for explicit QHP
recommendations and the methodology for the default display of QHPs on
their websites (for example, alphabetically based on plan name, from
lowest to highest premium, etc.). We believe this proposed new
requirement would provide consumers with a better understanding of the
information being presented to them on web-broker websites, thereby
enabling them to make better informed decisions and shop for and select
QHPs that best fit their needs.
Web-broker websites typically begin their consumer experiences with
a series of screening questions. Often these screening questions are
intended to assist consumers with determining whether they may qualify
for insurance affordability programs (for example, APTC or Medicaid).
Sometimes the screening questions request additional information
unrelated to potential eligibility for insurance affordability
programs, such as asking about preferred providers, prescription drug
needs, or expected need for health care services in the coming year.
Some web-brokers use the information collected in response to the
preliminary screening questions to recommend one or more QHPs to
consumers, or to rank all available QHPs from most to least
recommended. Web-broker websites may recommend QHPs so long as they do
not do so based on compensation an agent, broker, or web-broker
receives from QHP issuers, consistent with Sec. 155.220(c)(3)(i)(L),
as described above. Current rules do not require web-broker websites to
include an explanation of the rationale for QHP recommendations. All
web-broker websites must adopt a default display of QHPs by virtue of
providing consumers a list of available QHPs, and the default display
implicitly recommends those QHPs displayed at the top of the list.\254\
In addition, many web-broker websites offer filtering tools that
consumers may use to adjust the default display of QHPs (for example,
reordering the QHPs from lowest to highest deductible or limiting the
display to silver metal level QHPs). In cases in which QHP display
filtering tools are available and prominently displayed on a web-broker
website, and when the default application of a filter produces the
default ordering of QHPs displayed, the methodology for the default QHP
display may be apparent. However, in other cases, consumers may not
realize the implications of the default display of QHPs or may find it
difficult to understand the methodology underlying the default display.
Current rules do not require web-broker websites to include an
explanation of the methodology used for their default displays of QHPs.
---------------------------------------------------------------------------
\254\ 45 CFR 155.220(c)(3)(i)(B) requires web-broker websites to
provide consumers the ability to view all QHPs offered through the
Exchange.
---------------------------------------------------------------------------
We support web-broker websites' use of innovative decision-support
tools for consumers to help them shop for and select QHPs that best fit
their needs. However, web-broker websites that explicitly recommend or
rank QHPs do
[[Page 644]]
not always provide an explanation for their recommendations or
rankings. Similarly, web-broker websites may not include an explanation
of the methodology used for their default displays of QHPs, and it may
not otherwise be apparent what methodologies are used. The absence of
such explanations may cause some consumers to misunderstand the bases
for the recommendations displayed to them on web-broker websites
(whether explicit or implicit), or may prevent them from assessing the
value of the recommendations (for example, whether a recommendation is
based on the factors most important to them). In addition, the lack of
explanations for QHP recommendations on web-broker websites may obscure
that the web-broker is recommending QHPs based on compensation the web-
broker receives from QHP issuers in violation of Sec.
155.220(c)(3)(i)(L). For these reasons, we propose to amend Sec.
155.220 to add proposed new paragraph (c)(3)(i)(M) that would require
web-broker websites to prominently display a clear explanation of the
rationale for QHP recommendations and the methodology for its default
display of QHPs.
We seek comment on this proposal.
d. Federally-Facilitated Exchange Standards of Conduct (Sec.
155.220(j))
We propose to amend Sec. 155.220(j)(2)(i) such that its
nondiscrimination protections would explicitly prohibit discrimination
based on sexual orientation and gender identity. HHS previously
codified such nondiscrimination protections at Sec. 155.220(j), but
amendments made in 2020 to Sec. 155.220(j) removed any reference to
sexual orientation and gender identity. If finalized, this proposal
would revert Sec. 155.220(j) to the pre-2020 nondiscrimination
protections.
Section 155.220(j)(2)(i) describes that an individual or entity
described in paragraph (j)(1) must provide consumers with correct
information, without omission of material fact, regarding the FFE, QHPs
offered through the FFE, and insurance affordability programs, and
refrain from marketing or conduct that is misleading (including by
having a direct enrollment website that HHS determines could mislead a
consumer into believing they are visiting HealthCare.gov), coercive, or
discriminates based on race, color, national origin, disability, age,
or sex. Previously, in the 2017 Payment Notice final rule, we finalized
Sec. 155.220(j)(2)(i) to also prohibit discrimination based on sexual
orientation and gender identity.\255\ However, in the 2020 final rule
related to section 1557 of the ACA, HHS revised certain CMS
regulations, including Sec. 155.220(j)(2)(i), by removing sexual
orientation and gender identity as bases of discrimination subject to
the CMS regulations' nondiscrimination protections.\256\
---------------------------------------------------------------------------
\255\ 80 FR 12204 (March 8, 2016).
\256\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020
section 1557 final rule revised the following CMS regulations: 45
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
---------------------------------------------------------------------------
CMS possesses statutory authority independent of section 1557 of
the ACA to prohibit discrimination in the group and individual market
pursuant to the Secretary's authority to establish procedures for
States to permit agents and brokers to enroll consumers in QHPs through
the FFEs, as described in sections 1312(e) of the ACA,\257\ and the
authority to establish requirements with respect to the operation of
Exchanges, the offering of QHPs through such Exchanges, and other
requirements as the Secretary determines appropriate under sections
1321(a)(1)(A), (B), and (D) of the ACA. Pursuant to this authority, in
the 2017 Payment Notice final rule, HHS finalized at Sec. 155.220
standards of conduct for agents and brokers that assist consumers to
enroll in coverage through the FFEs to protect consumers and ensure the
proper administration of the FFEs, including nondiscrimination
standards at Sec. 155.220(j)(2)(i) that prohibited agents, brokers and
web-brokers described in paragraph (j)(1) from discriminating based on
sexual orientation and gender identity. CMS further explained that such
standards of conduct were necessary to protect against agent and broker
conduct that is harmful towards consumers, or that prevents the
efficient operation of the FFEs. CMS proposes to exercise that same
authority here to amend Sec. 155.220(j)(2)(i) to again prohibit an
individual or entity described in paragraph (j)(1) from discriminating
based on sexual orientation and gender identity. Sections 1312(e) and
1321(a)(1)(A), (B), and (D) of the ACA are the same authorities CMS
relies upon for implementation of existing nondiscrimination
protections at Sec. 155.220(j)(2)(i). Utilizing these same authorities
to again prohibit discrimination based on sexual orientation and gender
identity at Sec. 155.220(j)(2)(i) would be consistent with the
authority CMS relies upon for the existing protections at Sec.
155.220(j)(2)(i) that currently prohibit discrimination on the basis of
race, color, national origin, disability, age, or sex. We believe such
amendments are warranted in light of the existing trends in health care
discrimination and are necessary to better address barriers to health
equity for LGBTQI+ individuals.
---------------------------------------------------------------------------
\257\ 85 FR 37218-21 (June 19, 2020).
---------------------------------------------------------------------------
A more in-depth discussion of these developments and other factors
considered in proposing amendments to CMS nondiscrimination protections
is included earlier in the preamble to Sec. 147.104 under section
III.B.1.b. of this preamble. For brevity, we refer back to Sec.
147.104 under section III.B.1.b. of the preamble rather than restating
the issues here.
We seek comment on this proposal.
i. Providing Correct Information to the FFEs
Section 155.220(j)(2) sets forth the standards of conduct for
agents, brokers, or web-brokers that assist with or facilitate
enrollment of qualified individuals, qualified employers, or qualified
employees in coverage in a manner that constitutes enrollment through
an FFE or that assist individuals in applying for APTC and CSRs for
QHPs sold through an FFE. As explained in the 2017 Payment Notice
proposed rule, these standards are designed to protect against agent,
broker, and web-broker conduct that is harmful towards consumers or
prevents the efficient operation of the FFEs.\258\ Pursuant to Sec.
155.220(j)(2)(ii), agents, brokers, or web-brokers must provide the
FFEs with ``correct information under section 1411(b) of the Affordable
Care Act.'' Section 1411(b) of the ACA details the information required
to be provided by applicants to the Exchange to determine eligibility
for Exchange coverage, APTC, CSRs, and individual responsibility
exemptions, including the applicant's name, address, and information
regarding household income.\259\ Section 1411(h) of the ACA provides
for the imposition of civil penalties if any person fails to provide
correct information under section 1411(b) to the Exchange. Consistent
with Sec. 155.220(l), agents, brokers and web-brokers that assist with
or facilitate enrollment of qualified individuals, qualified employers,
or qualified employees in states with SBE-FPs must comply with all
applicable FFE standards. This includes, but is not limited to,
compliance with the FFE standards of conduct in Sec. 155.220(j). We
propose to amend Sec. 155.220(j)(2)(ii) to add proposed new Sec.
155.220(j)(2)(ii)(A) through (D) to codify additional details regarding
the requirement that agents,
[[Page 645]]
brokers, and web-brokers provide correct information to FFEs and SBE-
FPs. More specifically, we propose to capture specific examples of what
it means to provide correct information to the FFEs and SBE-FPs with
respect to the consumer's email address, mailing address, telephone
number, and household income projection based on our experience
operating the FFEs and the Federal platform on which certain State-
based Exchanges rely.
---------------------------------------------------------------------------
\258\ 80 FR at 75526-75527.
\259\ Also see 45 CFR 155.285(a)(1)(i) and (ii).
---------------------------------------------------------------------------
HHS has frequently observed applications submitted to the FFEs that
contain incorrect consumer information, including applications that
contain incorrect email addresses, telephone numbers, and mailing
addresses. As administrator of the FFEs, HHS also has received
applications that contain incorrect consumer household income
projections that do not accurately reflect future consumer household
income. These practices can harm consumers and prevent the efficient
operation of the FFEs. Therefore, we propose to add language to Sec.
155.220(j)(2)(ii) to address these common problems occurring on
Exchange applications and provide clear standards intended to
substantially reduce the occurrence of those problems to protect
consumers and the efficient operation of the Exchanges. We also propose
to amend Sec. 155.220(j)(2)(ii) to make clear that the proposed
standards of conduct related to agents, brokers, and web-brokers
providing the FFEs and SBE-FPs with correct information that are listed
in proposed new Sec. 155.220(j)(2)(ii)(A) through (D) are not
exhaustive, but are simply the areas where HHS has thus far identified
a need for more direct and clear guidance.
First, we propose to add proposed new Sec. 155.220(j)(2)(ii)(A),
which would provide that an agent, broker, or web-broker may only enter
an email address on an application for Exchange coverage or for APTC
and CSRs for QHPs sold through an FFE or SBE-FP that is secure, not
disposable, and belongs to the consumer or the consumer's authorized
representative designated in compliance with Sec. 155.227. We also
propose to clarify that email addresses may only be entered on Exchange
applications with the consent of the consumer or the consumer's
authorized representative, and that properly entered email addresses
would be required to adhere to the following guidelines pursuant to
proposed new Sec. 155.220(j)(2)(ii)(A)(1) through (3): (1) The
consumer's email addresses may not have domains that remove email from
an inbox after a set period of time; (2) the consumer's email address
must be accessible by the consumer, or the consumer's authorized
representative designated in compliance with Sec. 155.227, and may not
be accessible by the agent, broker, or web-broker, and (3) the
consumer's email addresses may not have domains that belong to the
agent, broker, or web-broker or their business or agency. These
proposed standards align with existing guidance provided to agents,
brokers, and web-brokers.\260\
---------------------------------------------------------------------------
\260\ https://www.regtap.info/uploads/library/AB_Slides_Compliance_052021_5CR_062221.pdf See Compliance with
Marketplace Requirements: Reminders for Agents and Brokers, May 20,
2021, available at https://www.regtap.info/uploads/library/AB_Slides_Compliance_052021_5CR_062221.pdf.
---------------------------------------------------------------------------
HHS is proposing to codify these standards because it has observed
numerous Exchange applications that contain email addresses that are
disposable (where emails disappear after a set number of days),
unsecure (where emails may be accessed without a password), or
temporary (where the email address will cease to receive messages after
a set time). HHS' concern arises from the fact that it has observed
agents, brokers, and web-brokers submitting unauthorized Exchange
applications on behalf of consumers without their knowledge or consent
that contain these types of email addresses. HHS recognizes that such
email addresses may be used by consumers to avoid receiving spam emails
to a main inbox, but the use of these email addresses on Exchange
applications defeats the purpose of entering an email address and
occurs at a higher rate on applications assisted by agents, brokers,
and web-brokers, many of which are unauthorized. Consumers who wish to
avoid receiving emails from the Exchange and who are being assisted by
an agent, broker, or web-broker may simply omit a contact email address
from their Exchange application.
The email address provided as part of an Exchange application
should provide a secure place for a consumer to receive vital
information from the Exchange about their application. Emails sent to
consumers through the Exchange often contain important information. As
such, the consumer's email address entered on an Exchange application
should be secure and only accessible by the consumer or the consumer's
authorized representative designated in compliance with Sec. 155.227.
Allowing the use of email addresses that are disposable, unsecure, or
temporary may harm the consumer by preventing the consumer from
receiving important information from the Exchange regarding their
Exchange application. It also could prevent the efficient operation of
the Exchange. We therefore propose in this rule to clarify and codify
that if an email address is included on the Exchange application, it
must be the consumer's, or that of the consumer's authorized
representative designated in compliance with Sec. 155.227, to comply
with the FFE standard of conduct under Sec. 155.220(j)(2)(ii) to
provide correct information to the Exchange.
Second, we propose to add proposed new Sec. 155.220(j)(2)(ii)(B),
which would provide that an agent, broker, or web-broker may only enter
a telephone number on an application for Exchange coverage or an
application for APTC and CSRs for QHPs that belongs to the consumer or
their authorized representative designated in compliance with Sec.
155.227. We also propose to provide that telephone numbers entered on
Exchange applications may not be the personal number or business number
of the agent, broker, or web-broker assisting with or facilitating
enrollment through an FFE or assisting the consumer in applying for
APTC and CSRs for QHPs, or their business or agency, unless the
telephone number is actually that of the consumer or their authorized
representative. These proposed standards align with existing guidance
provided to agents, brokers, and web-brokers.\261\
---------------------------------------------------------------------------
\261\ Ibid.
---------------------------------------------------------------------------
Similar to email addresses, a telephone number belongs to the
consumer if they, or their authorized representative, are accessible at
the number and have access to the number. A telephone number provides a
way for the consumer or their authorized representative to be contacted
if there is an issue or question with the Exchange application.
Allowing an agent, broker, or web-broker to list their telephone number
or a telephone number associated with their business or agency in the
place of the consumer's telephone number would not serve or benefit the
consumer, but may harm the consumer by preventing the consumer from
receiving important information from the Exchange regarding their
Exchange application. It also could prevent the efficient operation of
the Exchange. In addition, unlike email addresses, a telephone number
is a required field when creating and submitting an Exchange
application. We therefore propose in this rule to clarify and codify
that the telephone number included on the Exchange application must be
the consumer's, or that of the consumer's authorized representative as
designated in compliance with Sec. 155.227, to comply with the FFE
standard of conduct under Sec. 155.220(j)(2)(ii) to provide correct
information to the Exchange.
[[Page 646]]
Third, we propose to add proposed new Sec. 155.220(j)(2)(ii)(C),
which would provide that an agent, broker, or web-broker may only enter
a mailing address on an application for Exchange coverage or an
application APTC and CSRs for QHPs that belongs to, or is primarily
accessible by, the consumer or their authorized representative
designated in compliance with Sec. 155.227. Further, the mailing
address entered on the Exchange application must not be for the
exclusive or convenient use of the agent, broker, or web-broker, and
must be an actual residence or a secure location where the consumer or
their authorized representative may receive correspondence, such as a
P.O. Box or homeless shelter. These proposed standards align with
existing guidance provided to agents, brokers, and web-brokers.\262\ We
also propose to provide that mailing addresses entered on Exchange
applications may not be that of the agent, broker, or web-broker, or
their business or agency, unless it is the rare situation where that
address is the actual residence of the consumer or their authorized
representative. HHS is proposing this change because it has observed
numerous instances in which agents, brokers, or web-brokers have
engaged in unauthorized enrollments of consumers in Exchange coverage
without their knowledge or consent that involve the use of the same
common mailing address on multiple Exchange applications that are not
the actual residence of the consumer or their authorized
representative.
---------------------------------------------------------------------------
\262\ Ibid.
---------------------------------------------------------------------------
As with telephone numbers, Exchange applications must provide a
mailing address where the consumer or their authorized representative
may be reached. Application or plan information may be sent to this
mailing address, which is why it is important that the mailing address
be the actual residence or a secure location where the consumer or
their authorized representative may receive correspondence. Entering an
incorrect mailing address on a consumer's Exchange application would
result in situations where the consumer would not receive this
information. This would harm consumers and prevent the efficient
operation of the Exchange. We therefore propose in this rule to clarify
and codify that the mailing address included on the Exchange
application must be the consumer's, or the consumer's authorized
representative as designated in compliance with Sec. 155.227, to
comply with the FFE standard of conduct under Sec. 155.220(j)(2)(ii)
to provide correct information to the Exchange.
Fourth, to minimize consumer harm stemming from the IRS
reconciliation process, as well as to protect Exchange operations from
inaccurate APTC and CSR determinations, we propose to add proposed new
Sec. 155.220(j)(2)(ii)(D), which would provide that when submitting
household income projections on applications submitted to the Exchange
to determine a tax filer's eligibility for APTC in accordance with
Sec. 155.305(f) or CSRs in accordance with Sec. 155.305(g), an agent,
broker, or web-broker may only enter a household income projection for
a consumer that the consumer or the consumer's authorized
representative designated in compliance with Sec. 155.227, has
authorized and confirmed is an accurate estimate. We propose to require
that household income projections on Exchange applications must be
attested to by the consumer or their authorized representative, and
clarify that the agent, broker, or web-broker may answer questions
posed by the consumer or their authorized representative related to
household income projection, such as helping determine what qualifies
as household income.
HHS is proposing this change because it has observed several
instances in which agents, brokers, and web-brokers have provided
inaccurate consumer household income projections on Exchange
applications to obtain the lowest monthly premium rate for QHP
coverage. This is problematic in situations when consumers are enrolled
without their knowledge or consent because if a consumer is enrolled in
an Exchange policy with a zero-dollar monthly payment, the consumer may
not be aware they have been enrolled because there would not be a
monthly bill. HHS has observed several instances where consumers have
gone months without realizing they are enrolled in a QHP with APTC,
typically finding out about the unauthorized enrollment when the IRS
contacts them regarding money they owe due to not qualifying for all or
part of the APTC paid for this coverage or when the IRS delays release
of a tax refund.
Pursuant to Sec. 155.305(f), a tax filer is, in general, not
eligible for APTC unless the Exchange determines that the tax filer is
expected to have household income, as defined in 26 CFR 1.36B-1(e), of
greater than or equal to 100 percent but not more than 400 percent of
the FPL for the year for which coverage is requested.\263\ It is
crucial that consumers applying for a QHP or applying for APTC and CSRs
for QHPs provide an estimate of their projected household income that
is as accurate as possible for an Exchange to be able to determine
their eligibility for APTC. Failure to provide correct information on
household income can harm consumers by creating liability during the
reconciliation process or delaying the issuance of a tax refund, as
well as prevent the efficient operation of the Exchange. More
specifically, although eligible consumers may use APTC to lower their
monthly premiums for QHP coverage through an Exchange if a consumer's
projected household income on his or her Exchange application
submission is inaccurate and lower than the actual household income,
the consumer is likely to have excess APTC (the extent to which APTC
exceeds the allowed PTC), all or a portion of which must be repaid when
the consumer files his or her federal income tax return for the year of
coverage as required under 26 U.S.C. 36B(f) and 26 CFR 1.36B-4. Each
year, consumers for whom APTC is paid must submit Form 8962 with their
annual federal income tax return to the IRS. On Form 8962, the consumer
must reconcile the APTC paid on his or her behalf with the PTC \264\
the consumer is allowed. Generally, consumers whose projected household
annual income at enrollment is less than the actual annual household
income will have excess APTC that must be repaid, subject to a
repayment limit for consumers with household income below 400 percent
of the FPL. Consumers are required to repay excess APTC by increasing
their tax liability for the year by all or a portion of the excess
APTC. Good-faith income projections, versus an income projection
designed to achieve the lowest monthly rate, better protect the
consumer from the unexpected cost and burden of repaying large amounts
of APTC. Additionally, per Sec. 155.305(b), Exchange enrollees must
report changes that may impact their eligibility for financial
assistance or coverage, including their projected annual household
income, within 30 days of the change.
---------------------------------------------------------------------------
\263\ Section 9661 of the American Rescue Plan Act of 2021 makes
individuals with household incomes above 400 percent of the FPL who
meet all other eligibility criteria eligible for APTC, but only
through PY 2022.
\264\ https://www.irs.gov/pub/irs-pdf/p974.pdf.
---------------------------------------------------------------------------
CSRs are similarly tied to a consumer's household income and they
lower the amount that certain eligible individuals have to pay for
deductibles, copayments, and coinsurance. Incorrect projections of a
consumer's household income would also lead to incorrect CSR
determinations, which would harm
[[Page 647]]
QHP issuers and prevent the efficient operation of the Exchange.
An estimate of a consumer's household income is required on the
Exchange application if the consumer is applying for APTC and CSRs. As
outlined above, agents, brokers, or web-brokers who are intentionally
or negligently entering inaccurate household income projections on a
consumer's Exchange application can harm consumers and prevent the
efficient operation of the Exchange. We therefore propose in this rule
to clarify and codify that if household income projections are included
on the Exchange application, the estimate must be attested to by the
consumer or the consumer's authorized representative as designated in
compliance with Sec. 155.227 to comply with the FFE standard of
conduct under Sec. 155.220(j)(2)(ii) to provide correct information to
the Exchange.
As noted previously in this rule, the proposal to amend Sec.
155.220(j)(2)(ii) to add proposed new Sec. 155.220(j)(2)(ii)(A)
through (D) is not intended to constitute an exhaustive list of
practices that govern providing correct information to the Exchange
under Sec. 155.220(j)(2)(ii); rather, these are areas where HHS has
thus far identified a need for more direct and clear guidance to
protect consumers and the efficient operation of the Exchanges.
We seek comment on these proposals.
ii. Prohibited Business Practices
We propose to amend Sec. 155.220(j)(2) to add several new
standards of conduct for agents, brokers, and web-brokers that assist
consumers with applying for and enrolling in coverage through an FFE or
SBE-FP, with or without APTC and CSRs. Similar to the standards first
established in the 2017 Payment Notice, these additional standards are
also intended to protect against agent, broker, and web-broker conduct
that is harmful towards consumers or frustrates the efficient operation
of the Exchange. More specifically, we propose to codify standards
related to the use of scripting and other automation interactions with
CMS Systems or the DE Pathways (including both Classic DE and EDE),
identity proofing consumer accounts on HealthCare.gov, and providing
assistance with SEP enrollments. HHS is proposing these new FFE
standards of conduct for agents, brokers, and web-brokers assisting
consumers in FFEs and SBE-FPs because it has observed practices in
these areas that have caused or can cause harm to consumers, as well as
impede the efficient operation of the Exchange.
iii. Prohibited Automated Interactions With CMS Systems
In order to enroll qualified individuals in a QHP in a manner that
constitutes enrollment through the Exchange and assist individuals in
applying for APTC and CSRs for QHPs, agents, brokers, and web-brokers
must comply with the regulatory requirements contained in Sec.
155.220, including the requirement that such agents, brokers, and web-
brokers comply with the terms of applicable agreements between the
agent, broker, or web-broker and the Exchange.\265\ One such agreement,
the ``Agent Broker General Agreement for Individual Market Federally-
Facilitated Exchanges and State-Based Exchanges on the Federal platform
(IM General Agreement),'' \266\ sets forth requirements related to
automation. Specifically, section IV(c)(i)(4) of the IM General
Agreement provides that scripting and other automation of interactions
with CMS Systems or the DE Pathways are strictly prohibited, unless
approved in advance by CMS. While these requirements are addressed in
the IM General Agreement, they are not currently explicitly set forth
in regulation. Therefore, we propose to amend Sec. 155.220(j)(2) to
add proposed new Sec. 155.220(j)(2)(vi) to codify requirements and
limitations on the use of automation and align the regulation with the
IM General Agreement. New proposed Sec. 155.220(j)(2)(vi) would
provide that an agent, broker, or web-broker that assists with or
facilitates enrollment of qualified individuals, qualified employers,
or qualified employees, in coverage in a manner that constitutes
enrollment through an FFE or SBE-FP, or assists individuals in applying
for APTC and CSRs for QHPs sold through an FFE, or SBE-FP must not
engage in scripting and other automation of interactions with CMS
Systems or DE Pathways, unless approved in advance in writing by CMS.
---------------------------------------------------------------------------
\265\ 45 CFR 155.220(d).
\266\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/ab_py2020_im_general_agreement_final_1.pdf.
_____________________________________-
CMS Systems to which CMS-registered agents, brokers, and web-broker
may have access include HealthCare.gov, and the CMS Enterprise Portal.
Codifying a regulation that addresses the use of automation in relation
to these systems and platforms would help to establish clear and
enforceable standards that would govern the behavior of agents,
brokers, and web-brokers when assisting Exchange applicants. It would
also clarify CMS' authority to take enforcement action against agents,
brokers, and web-brokers for violations of these requirements.
HHS is proposing this standard of conduct because it has observed
instances where unauthorized automated browser-based interactions with
Exchange systems have led to unauthorized enrollments, unauthorized
application changes, or unauthorized access to consumer PII. The risk
of harm to consumers and the efficient operation of the Exchange is
heightened when automated interactions occur because more consumer
information can be downloaded using automation than through a manual
process. Automated browser-based interactions with Exchange systems can
lead to increases in unauthorized enrollments, unauthorized application
changes, or unauthorized access to consumer PII because agents,
brokers, and web-brokers could find far more consumer information using
automation, which could result in the unauthorized taking, use, or sale
of significant amounts of consumer PII for unlawful purposes. Allowing
automation would also create significant traffic in the system, which
could result in increased risk of system speed slowdowns and stability
issues, as these automated interactions would cause a lot more system
activity per user than anticipated and planned for. We seek comments on
these concerns and this proposal. While this proposed rule is under
consideration, CMS will continue to take appropriate enforcement action
in response to situations resulting from unauthorized use of automation
in connection with CMS Systems.\267\
---------------------------------------------------------------------------
\267\ See 45 CFR 155.220(g), (k), and (m).
---------------------------------------------------------------------------
We note that certain web-broker interactions with the Exchange were
created with the intention of being automated, including the plan
finder Application Program Interface (API) and Marketplace API. Thus,
this proposal to prohibit use of automation in other circumstances is
sufficiently narrowly tailored to accommodate these limited instances
when automation is permitted in connection with CMS Systems or DE
Pathways when approved in advance in writing by CMS. CMS believes that
other uses of automation beyond what is currently approved may have
appropriate business use cases. We therefore seek comment on
appropriate uses of automation that may contribute to the efficient
operation of the FFEs and SBE-FPs, and the DE Pathways.
iv. Identity Proofing
HealthCare.gov utilizes identity proofing to verify the identity of
a consumer when a new Exchange
[[Page 648]]
account is created. We propose to amend Sec. 155.220(j)(2) to add
proposed new Sec. 155.220(j)(2)(vii), which would provide that when
identity proofing accounts on HealthCare.gov, agents, brokers, or web-
brokers must only use an identity that belongs to the consumer.
Currently, identity proofing is required when a consumer creates an
account on HealthCare.gov via an EDE site, and when a consumer works
with an agent or broker in person.\268\ When a consumer creates an
account on HealthCare.gov or an EDE site, they go through a remote
identity proofing (RIDP) process. The RIDP process is an Experian
service that takes basic demographic information regarding the consumer
and requires the consumer to answer multiple choice questions correctly
to proceed. This is done to ensure the consumer is a real person, to
protect the consumer's personal information, and to prevent someone
else from creating an Exchange account and applying for Exchange
coverage in another's name without their knowledge or consent.
---------------------------------------------------------------------------
\268\ Section 1411(g)(1) of the ACA.
---------------------------------------------------------------------------
We are proposing this amendment to Sec. 155.220(j)(2), as we have
observed situations in which agents have used the same identity
information to complete the identity proofing process for multiple
consumer Exchange accounts, which can harm to consumers and prevent the
efficient operation of the Exchange, undermines the purpose of identity
proofing consumers and is often associated with unauthorized
enrollments, identity theft, and fraud.
We seek comment on this proposal.
v. Providing Information to Federally-Facilitated Exchanges in
Connection With Special Enrollment Periods
Finally, Sec. 155.420(a)(1) provides that the Exchange must
provide SEPs during which qualified individuals may enroll in QHPs and
enrollees may change QHPs. We propose to amend Sec. 155.220(j)(2) to
add proposed new Sec. 155.220(j)(2)(viii), which would state that when
providing information to FFEs that may result in a determination of
eligibility for an SEP under Sec. 155.420, agents, brokers, and web-
brokers must obtain authorization from the consumer to submit the
request for a determination of eligibility for a SEP (although this
authorization does not need to be in writing) and make the consumer
aware of the specific triggering event and SEP for which the agent,
broker, or web-broker will be submitting an eligibility determination
request on the consumer's behalf. Under this new proposed standard of
conduct, agents, brokers, and web-brokers providing assistance with SEP
enrollments would be required to make reasonable, good faith efforts to
ascertain the consumer's eligibility for the SEP, consistent with the
existing standard under Sec. 155.220(j)(3). We propose this
requirement to address circumstances HHS has observed under which
consumers who apply for QHP enrollment through an SEP with the
assistance of an agent, broker, or web broker are not made aware of the
basis upon which their QHP application claims entitlement to an SEP, or
who otherwise did not authorize an agent, broker, or web-broker to
enroll them in a QHP or make a change to their current QHP enrollment.
The purpose of SEPs is to promote access to health insurance
coverage and continuous coverage by allowing individuals to enroll
outside of the open enrollment period only if they experience certain
SEP triggering events; this helps to avoid and control against adverse
selection that would destabilize the Exchanges. The purpose of
proposing to codify this requirement in proposed new Sec.
155.220(j)(2)(viii) is to ensure the validity and integrity of the SEP
process, avoid Exchange destabilization, and to create clear,
enforceable standards to help mitigate consumer harm by establishing
that agents, brokers, and web-brokers are responsible for providing
information to the FFE that is accurate to the best of their knowledge,
and to which the consumer has attested.
We seek comment on these proposals.
5. Premium Calculation (Sec. 155.240(e))
HHS proposes to add language at Sec. 155.240(e)(2) to apply the
premium calculation methodology currently applicable in the FFEs and
SBE-FPs to all Exchanges, beginning with PY 2024. This proposed
amendment to Sec. 155.240(e), along with the proposed amendments to
Sec. Sec. 155.305(f)(5) and 155.340, support HHS's proposal to clarify
that an Exchange is required to prorate the calculation of premiums for
individual market policies and the calculation of APTC in cases where
an enrollee is enrolled in a particular policy for less than the full
coverage month, including when the enrollee is enrolled in multiple
policies within a month, each lasting less than the full coverage
month. We further discuss these proposed changes in the Administration
of Advance Payments of the Premium Tax Credit and Cost-Sharing
Reductions (Sec. 155.340) section of this proposed rule where we
propose to require all Exchanges to prorate premium and APTC amounts in
cases where an enrollee is enrolled in a particular policy for less
than the full coverage month. We seek comment on these proposals.
6. Eligibility Standards (Sec. 155.305)
We are proposing a technical amendment to Sec. 155.305(f)(1)(i) to
clarify that the income eligibility standards used by the Exchange for
determining whether an individual is an applicable taxpayer for
purposes of APTC eligibility are the same as the income thresholds at
IRS regulation 26 CFR 1.36B-2(b). Whereas the current regulation states
expected household income must be ``greater than or equal to 100
percent but not more than 400 percent of the FPL for the benefit year
for which coverage is requested,'' the proposed amendment specifies the
individual must have an expected household income which will qualify
the tax filer as an applicable taxpayer according to 26 CFR 1.36B-2(b).
In turn, 26 CFR 1.36B-2(b) outlines the FPL percentage thresholds that
are used for determining PTC eligibility. In practice, the federal and
state Exchanges have always relied on thresholds outlined in 26 CFR
1.36B-2(b) to determine APTC eligibility, but we note that this
proposed change allows for greater regulatory consistency and minimizes
the need to update Sec. 155.305(f)(1)(i) in response to legislative
changes that may alter FPL percentage thresholds, as occurred for
certain years under the ARP.
7. Eligibility for Advance Payments of the Premium Tax Credit (Sec.
155.305(f)(5))
HHS proposes to amend Sec. 155.305(f)(5) to require that APTC must
be calculated in accordance with 26 CFR 1.36B-3 and would be subject to
the prorating methodology at proposed Sec. 155.340(i). This proposed
amendment to Sec. 155.305(f)(5), along with the proposed amendments at
Sec. Sec. 155.240(e), and 155.340, detailed elsewhere in this rule,
support HHS's proposal to clarify that an Exchange is required to
prorate the calculation of premiums for individual market policies and
the calculation of APTC in cases where an enrollee is enrolled in a
particular policy for less than the full coverage month, including when
the enrollee is enrolled in multiple policies within a month, each
lasting less than the full coverage month. We further discuss these
proposals in the Administration of Advance Payments of the Premium Tax
Credit and Cost-Sharing Reductions (Sec. 155.340) section of this
proposed rule. We seek comment on this proposal.
[[Page 649]]
8. Verification Process Related to Eligibility for Insurance
Affordability Programs--Employer Sponsored Plan Verification (Sec.
155.320)
Strengthening program integrity with respect to subsidy payments in
the individual market continues to be a top HHS priority. Accordingly,
we propose to revise Sec. 155.320(d)(4) to provide each Exchange with
the flexibility to tailor its employer sponsored plan verification
process based on its assessment of the risk of inappropriate payments
of APTC and CSRs as a result of associated risk and composition of
their enrolled population.
Currently, Exchanges must verify whether an applicant for APTC and
CSRs is eligible for or enrolled in an eligible employer sponsored plan
for the benefit year for which coverage is requested using available
data sources, if applicable, as described in Sec. 155.320(d)(2). For
any coverage year that an Exchange does not reasonably expect to obtain
sufficient verification data as described in Sec. 155.320(d)(2)(i)
through (iii), an alternate procedure applies. Specifically, Exchanges
must select a random sample of applicants and meet the requirements
under Sec. 155.320(d)(4). For benefit years 2016 through 2019,
Exchanges also could use an alternative process approved by HHS.
In the 2021 Payment Notice final rule, we finalized the policy that
for PYs 2020 and 2021, HHS would not take enforcement action against
Exchanges that do not perform random sampling as required by Sec.
155.320(d)(4), when the Exchange does not reasonably expect to obtain
sufficient verification data as described in Sec. 155.320(d)(2)(i)
through (iii). This policy was designed to reduce burden on Exchanges
while HHS finalized the results of a study to determine the potential
risk and risk factors, if any, that may be associated with applicants
that choose to enroll in an Exchange QHP with APTC/CSRs, rather than
coverage offered through their employer. In the 2022 Payment Notice
Final Rule, we extended this non-enforcement to PY 2022.
As we will discuss later in this preamble, HHS reviewed the results
of the 2019 study and found that the risk for inappropriate eligibility
or payment of APTC and CSRs based on applicant eligibility for or
enrollment in qualifying employer sponsored coverage was low.
Therefore, we are now proposing a new optional alternate procedure to
replace the current procedures under Sec. 155.320(d)(4). Under this
proposed option, an Exchange would have flexibility to design its
verification process based on the Exchange's assessment of risk for
inappropriate eligibility or payment for APTC or CSRs. Until a new
alternate procedure becomes effective, Exchanges must continue to use
the procedures set forth under Sec. 155.320(d)(4)(i), subject to the
enforcement policy in effect for PYs 2021 and 2022.
HHS' experience conducting random sampling revealed that the burden
associated with the verification activity far outweighed the activity's
value to the integrity of the program. We found that employer response
rates to HHS' requests for information were low. We further found that
the manual verification process described in Sec. 155.320(d)(4)(i)
requires significant resources and government funds, and the value of
the results ultimately did not appear to outweigh the costs of
conducting the work because only a small percentage of sampled
enrollees had been determined by HHS to have received APTC or CSRs
inappropriately. Based on our experiences with the random sampling
methodology under Sec. 155.320(d)(4)(i), HHS concluded that the
methodology may not be the best approach for all Exchanges to assess
the risk for inappropriate payment of APTC/CSRs associated with
applicants who may be eligible for or enrolled in qualifying employer
sponsored coverage.
As a result, in 2019, HHS conducted a study to: (1) Determine the
unique characteristics of the population with offers of employer
sponsored coverage that meets minimum value and affordability
standards, (2) compare premium and out-of-pocket costs for consumers
enrolled in affordable employer sponsored coverage to Exchange
coverage, and (3) identify the incentives, if any, that drive consumers
to enroll in Exchange coverage rather than coverage offered through
their current employer. The results of this study were finalized in
early 2020 and aligned with HHS' previous findings from past studies
that there is likely a very low volume of applicants with offers of
affordable coverage through their employer that choose to
inappropriately enroll in an Exchange QHP with APTC and CSRs.
Specifically, the study found that no more than 2 percent of
enrollees received APTC/CSR inappropriately, and that lower income
individuals and families had the most incentive to enroll in an
Exchange QHP with APTC/CSR rather than coverage offered through an
employer. HHS is therefore of the view that the risk for inappropriate
payment of APTC and CSRs is low; thus, we propose to provide each
Exchange with the flexibility to tailor its verification process based
on its assessment of the risk of inappropriate payments of APTC/CSRs as
a result of associated risk and composition of their enrolled
population. This includes the ability of State Exchanges that operate
their own eligibility and enrollment platform and have implemented, or
are finalizing their implementation of, the current random sampling
requirements under Sec. 155.320(d)(4)(i), to continue employing the
random sampling process and requirements and refining the process, as
needed, under the proposed risk-based approach under Sec.
155.320(d)(4)(i). HHS believes that these changes will serve to protect
the integrity of the Exchange program by allowing all Exchanges to
proactively identify risk factors attendant to QHP enrollees' receipt
of APTC/CSRs for which they may not be eligible.
Specifically, we propose to allow Exchanges to implement a
verification method that utilizes an approach based on a risk
assessment identified through analysis of an Exchange's experience in
relation to APTC/CSRs payments. HHS expects that this risk assessment
would be informed by and identified through research and analysis of an
Exchange's experiences with current and past enrollments, and not
solely based on previously published research or literature.
Furthermore, there are certain standards that HHS requires that all
Exchanges adhere to when designing a risk-based approach to verify an
applicant's offer of employer sponsored coverage. As such, HHS requires
that any risk-based verification process be reasonably designed to
ensure the accuracy of the data and is based on the activities or
methods used by an Exchange such as studies, research, and analysis of
an Exchange's own enrollment data. For example, if an Exchange's
experience is that applicants from large companies that have different
classes of employees, who may or may not qualify for employer sponsored
coverage due to the number of hours they work per week, represent a
higher risk of improper APTC/CSR payments, then the Exchange may
implement a risk-based verification process to confirm whether
applicants employed by such companies appropriately received APTC/CSRs.
Given that the proposed risk-based approach to verify whether an
applicant has received an offer of coverage through an employer or is
enrolled in employer sponsored coverage depends largely on an
Exchange's assessment of risk and unique populations, HHS believes that
there are various ways in which a risk-based approach can be
[[Page 650]]
operationalized. Below we outline a few scenarios to provide
illustrative examples of the procedures an Exchange may follow.
The first scenario concerns Exchanges that do not have access to an
approved trusted data source that provides accurate and up-to-date
information regarding enrollment or pre-enrollment in coverage offered
through an employer and have determined that manual verification, such
as conducting random sampling of enrollees to determine if any had an
offer of affordable coverage through their employer but chose to enroll
in an Exchange QHP with APTC/CSR instead, requires significant
resources to conduct and have determined that the risk for improper
APTC/CSR payment is low. In this scenario, Exchanges may make a
reasonable determination and decide to accept a consumer(s)'
attestation without any further manual verification, similar to current
procedures to accept attestation only for residency and incarceration
status. Conversely, if an Exchange has determined a high risk for
improper APTC/CSR payment exists within its enrolled population, but
also doesn't have access to an approved trusted data source for
electronic verification, an Exchange may make a reasonable
determination that conducting manual verification as part of its risk-
based approach, such as conducting random sampling, is the appropriate
risk-based approach to conduct employer sponsored coverage
verification. Finally, there may be Exchanges that have determined that
they do have access to an approved, accurate, and up-to-date trusted
data source that allows for electronic verification of offers of
employer sponsored coverage. In this scenario, an Exchange may choose
to conduct electronic verification of their entire population through
that trusted data source to verify offers of employer sponsored
coverage. HHS believes that any of these approaches will serve to
satisfy the requirement to conduct employer sponsored coverage
verification using a risk-based approach while providing flexibility
for all Exchanges to determine the process that best meets the needs of
their populations.
Because HHS found that the risk for improper APTC payment is low in
Exchanges using the federal eligibility and enrollment platform, such
Exchanges would leverage the current attestation questions on the
single, streamlined application and accept attestation without further
verification against other trusted data sources. The attestation
questions include, ``Are any of these people currently enrolled in
health coverage?'' and ``Will any of these people be offered health
coverage through their job, or through the job of another person, like
a spouse or parent?''. HHS would also accept attestations related to
employer sponsored coverage because HHS currently lacks access to
another approved data source to verify whether an applicant has an
offer of employer sponsored coverage that is affordable and meets
minimum value standards. In the 2019 study referenced earlier in the
preamble, HHS examined whether the use of other data sources would be
feasible to verify offers and affordability of employer sponsored
coverage, such as the National Directory of New Hires (NDNH) database.
HHS determined that all available data sources were insufficient and
did not provide the necessary information to satisfy the requirement,
or would require legislative changes to give Exchanges permission to
access and use them for verification of employer sponsored coverage.
CMS notes that additional data source access, such as the NDNH, would
improve accuracy and reduce administrative burden to consumers for the
income verification step during the eligibility process.
Finally, under this proposal, we clarify that since SBE-FPs use the
HealthCare.gov platform for eligibility and enrollment determinations,
SBE-FPs would be required to follow the approach outlined above
consistent with CMS regulations and the agreements SBE-FPs sign with
CMS. Current Federal platform agreements require that SBE-FPs adhere to
the same policy and operations as Exchanges that use the federal
eligibility and enrollment platform regarding eligibility for and
enrollment in QHP coverage.
Furthermore, in accordance with Sec. 155.120(c), an Exchange's
verification program cannot be discriminatory in nature, and State
Exchange's verification processes will be monitored by HHS in
accordance with its authority under Sec. Sec. 155.1200 and 155.1210.
In designing their verification program, Exchanges should pay special
attention to known risks, including risk pool manipulation or steering
high risk employees from the group health market into the Exchanges.
The goal of this proposed policy is to ensure that only applicants
eligible to receive APTC/CSRs receive these subsidies, and we would
exercise our oversight authorities to ensure an Exchange's verification
policies are not used to prevent any particular class of applicants
from enrolling in QHP coverage with APTC/CSRs. We believe this approach
would allow Exchanges to proactively identify and target applicants who
may, for example, have an incentive to enroll in Exchange coverage with
APTC/CSRs rather than their employer sponsored plan that meets minimum
value and affordability standards. Further, we believe that a risk-
based approach for verification of eligibility for employer sponsored
eligibility or coverage verification would allow Exchanges to identify
a larger population of Exchange enrollees who would be ineligible for
APTC/CSRs due to an offer of employer sponsored coverage, as compared
to the random sampling method. We believe the new policy we propose
would more effectively protect the integrity of Exchange programs, as
Exchanges would be able to mitigate the risk of improper federal
payments in the form of APTC during the year more effectively.
Therefore, we propose to revise Sec. 155.320(d)(4) by removing the
requirement that the Exchange select a random sample of applicants for
whom the Exchange does not have data as specified in Sec.
155.320(d)(2)(i) through (iii) effective upon the finalization of the
final rule. we encourage State Exchanges to submit comments on the
proposed timing, especially if the proposal causes operational
challenges or undue hardship as a result. We propose adding new
language at Sec. 155.320(d)(4) under which an Exchange would be
permitted to design its verification process for enrollment in or
eligibility for qualifying coverage in an eligible employer sponsored
plan based on the Exchange's assessment of risk for inappropriate
payment of APTC/CSRs or eligibility for CSRs, as appropriate. The
proposed language at Sec. 155.320(d)(4) would provide all Exchanges
with the flexibility to determine the best means to design and
implement a process to verify an applicant's enrollment in or
eligibility for employer sponsored coverage, through analyses of
relevant Exchange data, research, studies, and other means appropriate
and necessary to identify risk factors for inappropriate payment of
APTC or eligibility for CSRs. As previously discussed earlier in this
rule, Exchanges must continue to use the procedures set forth in Sec.
155.320(d)(4)(i) until a new alternate procedure becomes effective. We
also propose to retain the current requirement at Sec.
155.320(d)(4)(i)(A) that the Exchange provide notice to the applicant,
but amend it such that it is contingent on whether the Exchange will be
contacting the employer of an applicant to verify whether an applicant
is enrolled in an
[[Page 651]]
eligible employer sponsored plan or is eligible for qualifying coverage
in an eligible employer sponsored plan for the benefit year for which
coverage is requested. Second, to provide more flexibility for
Exchanges, we propose no longer applying the requirement at Sec.
155.320(d)(4)(i)(D), which requires the Exchange to make reasonable
attempts to contact an employer listed on an applicant's Exchange
application to verify whether an applicant is enrolled in an employer
sponsored plan or is eligible for qualifying coverage in an eligible
employer sponsored plan.
As we explained above, HHS' experience has been that employer
compliance with these notices was low, which led to the proposal to
remove the random sampling requirement. However, Exchanges may continue
to send notification to employers as part of their risk-based
verification processes if they so choose. Third, we propose removing
the requirement at Sec. 155.320(d)(4)(i)(F), which states that after
90 days from the date on which the Exchange first provides notice to an
applicant as described in Sec. 155.320(d)(4)(i)(A), the Exchange must
redetermine eligibility for APTC and CSRs if the Exchange is unable to
obtain the necessary information from an applicant's employer regarding
enrollment in or eligibility for qualifying coverage in an employer
sponsored plan. We believe these proposed changes provide Exchanges
with the flexibility to implement a verification process for enrollment
in or eligibility for an employer sponsored plan that is tailored to
risks observed in their respective populations. As previously discussed
earlier in preamble, Exchanges must continue to use the procedures set
forth in Sec. 155.320(d)(4)(i) until a new alternate procedure becomes
effective.
Finally, we propose to remove the option for Exchanges to follow
the procedures outlined in Sec. 155.320(d)(4)(ii) to develop an
alternative verification process that is approved by HHS. The revisions
to Sec. 155.320(d)(4)(i) provide enough flexibility for Exchanges to
develop a risk-based verification process for eligibility for or
enrollment in employer sponsored coverage. Therefore, extending Sec.
155.320(d)(4)(ii) indefinitely would prove to be redundant in light of
the proposed changes discussed earlier in preamble.
We seek comment on these proposals.
9. Annual Eligibility Redetermination (Sec. 155.335)
We solicit comments on incorporating the net premium, MOOP,
deductible, and annual out-of-pocket costs (OOPC) of a plan into the
re-enrollment hierarchy as well as additional criteria or mechanisms
HHS could consider to ensure the Exchange hierarchy for re-enrollment
aligns with plan generosity and consumer needs, such as, re-enrolling a
current bronze QHP enrollee into an available silver QHP with a lower
net premium and higher plan generosity offered by the same QHP issuer.
In the Patient Protection and Affordable Care Act; Annual
Eligibility Redeterminations for Exchange Participation and Insurance
Affordability Programs; Health Insurance Issuer Standards Under the
Affordable Care Act, Including Standards Related to Exchanges final
rule, we established the renewal and re-enrollment hierarchy at Sec.
155.335(j) to minimize potential enrollment disruptions. Under Sec.
155.335(j), we modified the standards for re-enrollment in coverage
through Exchanges by proposing, in paragraph (j)(1), that if an
enrollee remains eligible for enrollment in a QHP through the Exchange
upon annual redetermination, and the product under which the QHP in
which he or she was enrolled remains available for renewal, consistent
with Sec. 147.106 such enrollee will have his or her enrollment in a
QHP through the Exchange under the product renewed unless he or she
terminates coverage, including termination of coverage in connection
with voluntarily selecting a different QHP, in accordance with Sec.
155.430. In this situation, we proposed that the QHP in which the
enrollee will be renewed will be selected according to the following
order of priority: (1) In the same plan as the enrollee's current QHP;
(2) if the enrollee's current QHP is not available, the enrollee's
coverage will be renewed in a plan at the same metal level as the
enrollee's current QHP; (3) if the enrollee's current QHP is not
available and the enrollee's product no longer includes a plan at the
same metal level as the enrollee's current QHP, the enrollee's coverage
will be renewed in a plan that is one metal level higher or lower than
the enrollee's current QHP; and (4) if the enrollee's current QHP is
not available and the enrollee's product no longer includes a plan that
is at the same metal level as, or one metal level higher or lower than
the enrollee's current QHP, the enrollee's coverage will be renewed in
any other plan offered under the product in which the enrollee's
current QHP is offered in which the enrollee is eligible to enroll.
Under paragraph (j)(2), we finalized standards to address re-
enrollment in situations in which no plans under the product under
which an enrollee's QHP is offered are available through the Exchange
for renewal, consistent with Sec. 147.106. In this situation, the
enrollee may be enrolled in a QHP under a different product offered by
the same issuer, to the extent permitted by applicable state law,
unless the enrollee terminates coverage including termination of
coverage in connection with voluntarily selecting a different QHP, in
accordance with Sec. 155.430. In such cases, the re-enrollment will
occur according to the following order of priority: (1) In a QHP
through the Exchange at the same metal level as the enrollee's current
QHP in the product offered by the issuer that is the most similar to
the enrollee's current product; (2) if the issuer does not offer
another QHP through the Exchange at the same metal level as the
enrollee's current QHP, the enrollee will be re-enrolled in a QHP
through the Exchange that is one metal level higher or lower than the
enrollee's current QHP in the product offered by the issuer through the
Exchange that is the most similar to the enrollee's current product;
and (3) if the issuer does not offer another QHP through the Exchange
at the same metal level as, or one metal level higher or lower than the
enrollee's current QHP, the enrollee will be re-enrolled in any other
QHP offered through the Exchange by the QHP issuer in which the
enrollee is eligible to enroll.
In the 2017 Payment Notice, we finalized the rule that provides for
auto-reenrollment in a QHP offered by another issuer through the
Exchange, as opposed to permitting a QHP issuer that no longer has a
QHP available to an enrollee through an Exchange to reenroll the
enrollee outside the Exchange in order to maintain coverage with APTC
and CSRs for the majority of Exchange enrollees who are receiving these
subsidies. Under this rule, we established, beginning in PY 2017, that
if no QHP from the same issuer is available to enrollees through the
Exchange, then to the extent permitted by applicable State law, the
Exchange could direct alternate enrollments for such enrollees into a
QHP from a different issuer unless the enrollee terminates coverage,
including termination of coverage in connection with voluntarily
selecting a different QHP, in accordance with Sec. 155.430. If the
applicable State regulatory authority declines to act to direct this
activity, such alternate enrollments would be directed by the Exchange.
With regard to how Exchanges will determine which plans such enrollees
should be auto-
[[Page 652]]
reenrolled into, we noted that this policy provided considerable
flexibility to Exchanges to implement this rule, in recognition of the
operational realities of implementing a re-enrollment hierarchy in the
often unique circumstances in which an issuer no longer has QHPs
available to an enrollee through the Exchange.
HHS is aware of stakeholder concerns that the enrollees in the FFEs
may fail to return to the Exchange to make an active plan selection in
situations in which changing plans could be beneficial to the enrollee,
and that re-enrollment rules may default enrollees into less beneficial
plans than other available plans.
We solicit comments on whether factors such as net premium, MOOP,
deductible, and OOPC should be reflected in a revised re-enrollment
hierarchy for all Exchanges, with consideration for the potential
impact of the actuarial value de minimis guidelines proposed in this
rule at Sec. Sec. 156.135 and 156.140 on cost-sharing. For example,
HHS could consider re-enrolling a current bronze QHP enrollee into an
available silver QHP with a lower net premium and higher plan
generosity offered by the same QHP issuer. Additionally, HHS could
consider re-enrolling a current silver QHP enrollee into another
available silver QHP, under the enrollee's current product and with a
service area that is serving the enrollee that is issued by the same
QHP issuer, that has lower OOPC. We also solicit comments on additional
criteria or mechanisms HHS could consider to ensure the hierarchy for
re-enrollment in all Exchanges takes into account plan generosity and
consumer needs beyond merely the retention of the most similar plan
available.
10. Administration of Advance Payments of the Premium Tax Credit and
Cost-Sharing Reductions (Sec. 155.340)
HHS is proposing to amend Sec. Sec. 155.240(e), 155.305(f)(5), and
155.340 to clarify that an Exchange is required to prorate the
calculation of premiums for individual market policies and the
calculation of the APTC in cases where an enrollee is enrolled in a
particular policy for less than the full coverage month, including when
the enrollee is enrolled in multiple policies within a month, each
lasting less than the full coverage month. HHS would require all
Exchanges, including the Exchanges on the Federal platform and State
Exchanges that operate their own eligibility and enrollment platforms
to implement the proposed proration methodology in the PY 2024 benefit.
HHS is limiting this proposed requirement to individual market policies
because many SHOP Exchanges, particularly those that operate in a
leaner fashion, like the federally-facilitated SHOP Exchanges, do not
calculate premiums. Additionally, APTC are not available through SHOPs.
Currently, Exchanges apply APTC to an applicable taxpayer's monthly
premium based on calculation, eligibility, and administration
requirements from two sources: (1) IRS regulations at 26 CFR 1.36-B-1
through 1.36B-3, and (2) HHS regulations at 45 CFR part 155. IRS
regulation at 26 CFR 1.36B-3(d) calculates PTC eligibility for a
partial month of coverage as the lesser of the premiums for the month
(reduced by any amount of such premiums refunded), or the monthly
premium for the second lowest cost silver plan (SLCSP) reduced by the
taxpayer's monthly contribution amount. Although 26 CFR 1.36B-3(d)
defines the calculation of the premium assistance amount for a coverage
month, and thus defines the calculation of the maximum APTC amount an
applicable taxpayer may apply to their monthly premium, it does not
describe how APTC is administered, which is regulated by HHS. When
administering APTC, Exchanges must adhere to requirements at 45 CFR
155.305(f), which establishes eligibility and calculation requirements
for APTC, 45 CFR 155.310(d)(2)(i), which requires the Exchange to
permit an applicable taxpayer to accept less than the full amount of
APTC for which they are eligible, and 45 CFR 155.340, which defines how
Exchanges must administer and allocate APTC amounts applied to
enrollees' monthly premiums.
Calculating maximum APTC as required under Sec. 155.305(f)
obligates the Exchange to calculate payments of the APTC in accordance
with the way PTC is calculated at 26 CFR 1.36B-3. The IRS methodology
described at 26 CFR 136.B-3 is appropriate for PTC, as PTC is
calculated retrospectively and can account for the changes in an
applicable taxpayer's premium across the entire tax year before the
applicable final amount is calculated at the time of tax filing.
Conversely, Exchanges administer APTC prospectively to issuers by
advancing premium assistance to issuers based on enrollees' eligibility
determinations and elections, which could change month-to-month before
final reconciliation occurs. Currently, HHS regulations governing APTC
eligibility and administration do not contain specific requirements on
how APTC should be administered for a policy in which an enrollee is
enrolled for less than the full coverage month. While the FFEs and SBE-
FPs already prorate APTC and premium amounts, State Exchanges presently
handle this scenario inconsistently, which may result in over-payment
of APTC to issuers that exceeds the monthly PTC amount for which an
applicable taxpayer will be eligible, thereby potentially triggering a
federal income tax liability for the applicable taxpayer.\269\
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\269\ HHS notes that an applicable taxpayer's excess APTC and
accompanying tax liability for such excess APTC is determined after
the taxpayer's PTC for the year of coverage has been calculated.
Consequently, the potential to incur income tax liability for excess
APTC is not limited to situations in which a consumer is enrolled in
a policy for less than a full coverage month and our proposed policy
will not completely eliminate an applicable taxpayer's risk of
incurring tax liability from excess APTC.
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By amending Sec. Sec. 155.240(e), 155.305(f)(5) and 155.340 to
require that the Exchange prorate the calculation of premiums and APTC
in cases where an enrollee is enrolled in a particular policy for less
than the full coverage month, HHS would provide needed clarification
for all Exchanges, resulting in greater consistency in APTC
administration and the consumer experience.
As explained earlier in this preamble, HHS proposes to add language
at Sec. 155.240(e)(2) to apply the methodology currently applicable in
the FFEs and SBE-FPs to all Exchanges, beginning with PY 2024. This
proposed amendment to Sec. 155.240(e) would support the accurate and
consistent calculation of partial-month enrollment premium amounts in a
way that aligns with the method of administering the APTC that we
propose in Sec. Sec. 155.305(f)(5) and 155.340.
HHS also proposes to amend Sec. 155.305(f)(5) by adding that APTC
must be calculated in accordance with 26 CFR 1.36B-3, subject to the
prorating methodology at proposed Sec. 155.340(i). This would create
uniform standards for taxpayers on how the APTC will be calculated for
months in which an enrollee is enrolled in a particular policy for less
than the full coverage month.
Finally, HHS proposes to amend Sec. 155.340 by adding paragraph
(i) to establish that, beginning with the PY 2024 benefit, all
Exchanges would be required to calculate applied APTC when an enrollee
is enrolled in a particular policy for less than the full coverage
month, including when the enrollee is enrolled in multiple policies
within a month, each lasting less than the full coverage month, as
equal to the product of (1) the APTC applied on the
[[Page 653]]
policy for 1 month of coverage divided by the number of days in the
month, and (2) the number of days for which coverage is provided on
that policy during the applicable month. This methodology would align
with the prorated calculation of premium amounts under Sec.
155.240(e). Furthermore, this proposed methodology would provide
Exchanges with a consistent method of prorating applied APTC amounts
that aligns with the calculation of PTC under 26 CFR 1.36B-3(d) while
ensuring that the calculation of APTC in situations in which an
enrollee is enrolled in a particular policy for less than the full
coverage month, including when the enrollee is enrolled in multiple
policies within a month, each lasting less than the full coverage
month, does not cause the APTC to exceed the PTC for the month as
calculated per 26 CFR 1.36B-3(d). This proposal would create
consistency for issuers across all Exchanges, help the enrollee by
keeping the enrollee's share of premiums stable, and reduce the
instances in which a taxpayer would have to repay excess APTC during
tax filing per section 36B(f)(2) of the Code and 26 CFR 1.36B-4. If the
proposal results in an excess of PTC over the amount of APTC paid for
an enrollee's coverage (net PTC), the applicable taxpayer would claim
the net PTC as a refundable tax credit.
These proposals are intended to protect consumers. State Exchanges
are not currently required to prorate APTC for mid-month policy changes
and, as a result, HHS may overpay APTC amounts to issuers in State
Exchanges not currently prorating in this manner. Income tax liability
due to excess APTC could pose significant financial burden to
applicable taxpayers, particularly low-income taxpayers, and creates
confusion about the affordability of health care coverage offered by an
Exchange.
Additionally, E.O. 14009 \270\ calls for a review of policies or
practices that may present unnecessary barriers to individuals and
families attempting to access Medicaid or ACA coverage, or that may
reduce the affordability of coverage or financial assistance for
coverage. Low-income populations are more likely to qualify for many
federal and state health and human services programs, including
APTC.\271\ The proposed methodology aligns with the goals of E.O.
14009, as it would promote consumer protection, encourage continuity of
coverage for individuals, and ensure consistent application of APTC
which makes Exchange coverage more affordable.
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\270\ Executive Order 14009; 86 FR 7793 (Feb. 2, 2021).
\271\ See https://familiesusa.org/wp-content/uploads/2021/04/2021-79_ARP-Coverage-Summary_Analysis_03_2021.pdf.
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Establishing a proration methodology that would apply universally
across all Exchange types--FFEs, SBE-FPs, and State Exchanges--would
ensure all Exchanges and issuers report and pay APTC similarly when
enrollees are enrolled in a particular policy for less than the full
coverage month, including when the enrollee is enrolled in multiple
policies within a month, each lasting less than the full coverage
month. HHS notes that this proposal would codify a methodology that the
FFEs, SBE-FPs, and some State Exchanges already utilize to prorate
APTC.
We are proposing to require this proposed proration methodology for
all Exchanges to implement beginning with the PY 2024 benefit, as HHS
acknowledges that implementing this proposed methodology will require
implementation and operational costs and time on the part of most State
Exchanges. HHS seeks comment on this proposal. HHS also seeks comment
on whether PY 2023 benefit implementation is feasible.
10. Special Enrollment Periods--Special Enrollment Period Verification
(Sec. 155.420)
In 2017, the HHS Market Stabilization Rule preamble explained that
HHS would implement pre-enrollment verification of eligibility for
certain special enrollment periods in all Exchanges on the Federal
platform.\272\ HHS also clarified its intention to not establish a
regulatory requirement that all Exchanges conduct special enrollment
period verifications in order to allow State Exchanges additional time
and flexibility to adopt policies that fit the needs of their
state.\273\ However, all State Exchanges conduct verification of at
least one special enrollment period type, and most State Exchanges have
implemented a process to verify the vast majority of special enrollment
periods requested by consumers.
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\272\ 82 FR at 18355 through 18358.
\273\ Ibid.
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We are now proposing to amend Sec. 155.420 to add new paragraph
(g) to state that Exchanges may conduct pre-enrollment verification of
eligibility for special enrollment periods, at the option of the
Exchange, and that Exchanges may provide an exception to pre-enrollment
special enrollment period verification for special circumstances, which
could include natural disasters or public health emergencies that
impact consumers or the Exchange. This is in order to encourage State
Exchanges to conduct special enrollment period verification but also
allow the FFEs, SBE-FPs, and State Exchanges to maintain flexibility in
implementing and operating special enrollment period verification.
Since 2017, Exchanges on the Federal platform implemented pre-
enrollment special enrollment period verification for certain special
enrollment period types commonly used by consumers to enroll in
coverage. New consumers, meaning consumers who are not currently
enrolled in coverage through the Exchange, who apply for coverage
through a special enrollment period type that requires pre-enrollment
verification by the Exchanges on the Federal platform must have their
eligibility electronically verified using available data sources or
submit supporting documentation to verify their eligibility for the
special enrollment period before their enrollment can become effective.
As stated in the HHS Marketplace Stabilization Rule, pre-enrollment
special enrollment period verification is only conducted for consumers
newly enrolling due to the potential for additional burden on issuers
and confusion for consumers if required for existing enrollees.\274\
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\274\ 82 FR at 18355 through 18360.
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While pre-enrollment special enrollment period verification can
decrease the risk for adverse selection and improve program integrity,
it can also deter eligible consumers from enrolling in coverage through
a special enrollment period because of the barrier of document
verification. Younger, often healthier consumers submit acceptable
documentation to verify their special enrollment period eligibility at
much lower rates than older consumers, which can negatively impact the
risk pool. Additionally, our experience operating the FFEs and the
Federal platform shows that pre-enrollment special enrollment period
verification disproportionately negatively impacts Black and African
American consumers who submit acceptable documentation to verify their
special enrollment period eligibility at much lower rates than White
consumers.
To support program integrity and streamline the consumer
experience, we are also proposing that the Exchanges on the Federal
platform would only continue to conduct pre-enrollment verification of
eligibility for one type of special enrollment period: The special
[[Page 654]]
enrollment period for new consumers who attest to losing minimum
essential coverage.\275\ The loss of minimum essential coverage special
enrollment period type comprises the majority, about 58 percent, of all
special enrollment period enrollments on the Exchanges on the Federal
platform and has electronic data sources that can be leveraged for
auto-verification. By verifying eligibility for this special enrollment
period type and not for other special enrollment periods, the Exchanges
on the Federal platform could limit the negative impacts of special
enrollment period verification and decrease overall consumer burden
without substantially sacrificing program integrity.
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\275\ See 45 CFR 155.420(d)(1)(i).
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We seek comment on these proposals.
11. General Program Integrity and Oversight Requirements (Sec.
155.1200)
The Payment Integrity Information Act of 2019 (PIIA) \276\ requires
federal agencies to annually identify, review, measure, and report on
the programs they administer that are considered susceptible to
significant improper payments. Pursuant to the PIIA, HHS is in the
planning phase of establishing a State Exchange Improper Payment
Measurement (SEIPM) program, as HHS has determined that APTC payments
may be susceptible to significant improper payments and are subject to
additional oversight. Therefore, we announced that we would be
implementing the SEIPM program and establishing requirements, which are
laid out in proposed provisions in a new subpart P.\277\
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\276\ Public Law 116-117 (Mar. 2, 2020).
\277\ Presentation and materials provided to the then
operational State Exchanges as part of ``All States'' meeting held
on February 21, 2019.
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The SEIPM program would allow for the accurate calculation of an
improper payment rate through the development of annual improper
payment estimates and subsequent reporting of improper payments. To
ensure improper payments can be calculated accurately, the SEIPM
program would require State Exchanges to provide HHS with access to
certain State Exchange data, including eligibility determinations and
enrollment information. State Exchanges with significant improper
payments may also be required to develop corrective action plans (CAP)
to correct the causes of the identified improper payments.
Currently, HHS approves or conditionally approves a state's
Blueprint Application to establish a State Exchange based on an
assessment of a state's attested compliance with relevant Exchange
statutory and regulatory requirements at section 1311 of the ACA and 45
CFR part 155. Thereafter, State Exchanges must meet specific program
integrity and oversight requirements specified at section 1313(a) of
the ACA, as well as Sec. Sec. 155.1200 and 155.1210. These
requirements provide HHS with the authority to oversee the Exchanges
after their establishment. There are various annual reporting
requirements for State Exchanges at Sec. 155.1200(b) including the
annual submission of: (1) A financial statement presented in accordance
with generally accepted accounting principles (GAAP); (2) an annual
report showing compliance with Exchange requirements; (3) performance
monitoring data; and (4) the annual submission of a report on instances
in which the State Exchange did not reduce an enrollee's premium by the
amount of the APTC in accordance to Sec. 155.340(g)(1) and (2).
Additionally, under Sec. 155.1200(c), each State Exchange is
required to engage or contract with an independent qualified auditing
entity that follows generally accepted government auditing standards
(GAGAS) to perform annual independent external financial and
programmatic audits. State Exchanges are required to provide HHS with
the results of the audits, to inform HHS of any material weakness or
significant deficiency identified in the audit, to develop and inform
HHS of any CAPs for such material weakness or significant deficiency,
and to make a public summary of the results of the external audit. The
CAPs are monitored by HHS until the findings are resolved.
Specifically, for the annual programmatic audit requirement, State
Exchanges must ensure that auditors address compliance with subparts D
and E under 45 CFR part 155, and other requirements under part 155, as
specified by HHS. This allows HHS to oversee compliance with
eligibility and enrollment standards to ensure that State Exchanges are
conducting accurate eligibility determinations and enrollment
transactions.
We propose to add new Sec. 155.1200(e) to permit a State Exchange
to meet the requirement to conduct an annual independent external
programmatic audit, as described at Sec. 155.1200(c), by completing
the required annual SEIPM program process. Therefore, HHS would
generally accept a State Exchange's completion of the SEIPM process for
a given benefit year as acceptable to meet the annual programmatic
audit requirement for that benefit year. We also propose to amend Sec.
155.1200(c) to cross-reference proposed Sec. 155.1200(e) to ensure the
coordination of these two requirements. We believe that these proposed
changes would ensure HHS retains necessary oversight authority of the
State Exchanges, particularly in the event that there are changes to
the SEIPM program in future benefit years. However, we would strive to
provide ample advance notice of any potential changes to the SEIPM
program, or to potentially allow for flexibility to satisfy
requirements at paragraph (c) in the event the SEIPM program is
unexpectedly suspended. These proposed changes would eliminate
duplicate efforts specific to the annual programmatic audit requirement
and reduce burden on the State Exchanges. They would also allow HHS to
continue to require programmatic audits of other subparts beyond
eligibility and enrollment, should HHS deem it necessary in future
years to ensure programmatic oversight and program integrity.
As described in new proposed subpart P, section 14, HHS intends to
implement the SEIPM program beginning with the 2023 benefit year. Thus,
measurement of improper payments for the 2023 benefit year would take
place in benefit year 2024, and reporting of the improper payment rate
would not occur until November 2025, at the earliest. Thereafter, State
Exchanges that HHS determines must submit CAPs would do so no sooner
than 2026. We would continue to closely coordinate with State Exchanges
as these timeframes are finalized and provide as much advance notice as
possible of relevant deadlines as they come due.
We seek comment on these proposals.
12. State Exchange Improper Payment Measurement Program (Sec. Sec.
155.1500 Through 155.1540)
In 2016, HHS completed a risk assessment of the APTC program.
Similar to other public-facing benefit programs, HHS determined that
the APTC program is susceptible to significant improper payments, and
as a result, HHS announced plans to increase the oversight of the APTC
program through the development and reporting of annual improper
payment estimates, and facilitating corrective actions.\278\ At that
time, we also announced that we would undertake rulemaking before
implementing the improper payment measurement methodology.
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\278\ Ibid.
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[[Page 655]]
In line with our prior announcement \279\ HHS is establishing a
pilot program and, as mentioned in section 12, is proposing regulations
governing HHS' SEIPM program. The SEIPM program would address all HHS
and State Exchange responsibilities so that HHS can accurately
calculate the SEIPM improper payment rate. Specifically, these proposed
regulations would pertain to State Exchanges that operate their own
eligibility and enrollment platform. These proposed regulations would
not pertain to State Exchanges that use the Federal platform to conduct
eligibility determinations and enrollment transactions. Additionally,
the proposed regulations would contain key SEIPM program definitions
and specify the manner in which HHS would collect information from
State Exchanges in order to estimate the SEIPM improper payment rate.
The proposed regulations would also account for the State Exchanges'
obligation to provide the required information and the manner in which
State Exchanges can contest HHS' findings regarding errors. Also, the
proposed regulations would convey State Exchange responsibilities
regarding CAPs that State Exchanges must submit to HHS for approval in
order to correct improper payments.
---------------------------------------------------------------------------
\279\ Ibid.
---------------------------------------------------------------------------
We would calculate the SEIPM improper payment rate for each benefit
year and expect the first calculation beginning with the 2023 benefit
year. Since the rate cannot be calculated until all SEIPM appeals are
resolved, we anticipate that the improper payment rate for the 2023
benefit year would be published in approximately November 2025. The
proposed regulations are necessary for HHS to properly oversee the
State Exchanges and ensure that errors resulting in improper payments
are corrected.
Current regulations found at 45 CFR 155.1200 and 155.1210 require
that a State Exchange have financial and operational safeguards in
place to avoid making inaccurate eligibility determinations, including
those related to APTC, CSR, and enrollments. However, as we stated in
our 2013 regulation, Sec. Sec. 155.1200 and 155.1210 were not intended
to be a part of any measurement program that may have been required
under the Improper Payments Elimination and Recovery Act of 2010,\280\
as updated by PIIA.\281\ Current program integrity audits, especially
as they relate to subparts D (eligibility) and E (enrollment) of part
155, focus on the processes and procedures that a State Exchange has
established to verify that a qualified individual meets eligibility
requirements. Current regulations at Sec. 155.1200(c) require State
Exchanges to hire an independent qualified auditing entity and submit
the external audit results to HHS. These programmatic audits do not
review, estimate, or report on the amounts or rates of improper
payments as the result of eligibility determination errors made by
State Exchanges. To meet the requirements of PIIA, to reduce burden on
State Exchanges, and to ensure consistency across State Exchanges in
terms of our review methodology, we propose to update programmatic
auditing requirements such that the completion of the annual SEIPM
program, as required by this subpart P, would satisfy the current
auditing requirements prescribed in Sec. 155.1200(c). As we
transition, we would coordinate our efforts with the CMS Center for
Consumer Information and Insurance Oversight and the CMS Office of
Financial Management. The goal of this coordination is to gain
efficiencies and avoid duplicative requirements that would
unnecessarily increase State Exchanges' workload, as well as the
requirement and burden of hiring independent qualified auditing
entities. Doing so would enable HHS and its Federal contractors to
obtain consistent information across all State Exchanges and to meet
our statutory mandate under PIIA. Therefore, we propose to establish a
new subpart P under 45 CFR part 155 (containing Sec. Sec. 155.1500
through 155.1540) to codify the SEIPM program requirements.
---------------------------------------------------------------------------
\280\ Public Law 111-204, 124 Stat. 2224 (July 22, 2010). The
original Improper Payment Information Act, Public Law 107-300 (2002)
has been updated by it successors, which include the Improper
Payment Elimination and Recovery Act, Public Law 111-204 (2010), the
Improper Payment Elimination and Recovery Improvement Act, Public
Law 112-248 (2012), and the Payment Integrity Information Act,
Public Law 116-117 (2020).
\281\ Patient Protection and Affordable Care Act; Program
Integrity: Exchange, SHOP, Premium Stabilization Programs, and
Market Standards, Proposed Rule, 78 FR 37032 at 37053 (Jun. 19,
2013).
---------------------------------------------------------------------------
We propose that the proposed regulations at subpart P would be
applicable in 2023 when the SEIPM program is proposed to begin its
operations.
a. Purpose and Definitions (Sec. 155.1500)
We are proposing to add new subpart P to part 155, which would
address various State Exchange and HHS responsibilities. HHS may use
Federal contractors as needed to support the performance of
statistical, review, or other activities.
We are proposing to add new Sec. 155.1500 to convey the purpose of
subpart P and definitions that are relevant to the SEIPM program.
At paragraph (a), we are proposing the purpose of subpart
P as setting forth the requirements of the SEIPM program for State
Exchanges.
At paragraph (b), we are proposing to codify the
definitions that are specific to the SEIPM program and key to
understanding the process requirements.
We are proposing the definition of ``Appeal of
redetermination decision (or appeal decision)'' to mean HHS' appeal
decision resulting from a State Exchange's appeal of a redetermination
decision.
We are proposing the definition of ``Corrective action
plan (CAP)'' to mean the plan a State Exchange develops in order to
correct errors resulting in improper payments.
We are proposing the definition of ``Error'' to mean a
finding by HHS that a State Exchange did not correctly apply a
requirement in subparts D and E of part 155 regarding eligibility for
and enrollment in a qualified health plan; APTC, including the
calculation of APTC; redeterminations of eligibility determinations
during a benefit year; or annual eligibility redeterminations.
We are proposing the definition of ``Error findings
decision'' to mean HHS' enumeration of errors made by a State Exchange,
including a determination of how the enumerated errors inform improper
payment estimation and reporting requirements.
We are proposing the definition of ``Redetermination of an
error findings decision (or redetermination decision)'' to mean HHS'
decision resulting from a State Exchange's request for a
redetermination of HHS' error findings decision.
We are proposing the definition of ``Review'' to mean the
process of analyzing and assessing data submitted by a State Exchange
to HHS in order for HHS to determine a State Exchange's compliance with
subparts D and E of part 155 as it relates to improper payments.
We are proposing the definition of ``State Exchange
improper payment measurement (SEIPM) program'' to mean the process for
determining
[[Page 656]]
estimated improper payments and other information required under the
PIIA, and implementing guidance, for APTC, which includes a review of a
State Exchange's determinations regarding eligibility for and
enrollment in a QHP; the calculation of APTC; redeterminations of
eligibility determinations during a benefit year; and annual
eligibility redeterminations.
b. Program Notification and Planning Process (Sec. 155.1505)
We are proposing to add new Sec. 155.1505 to outline the annual
program notification requirements related to the SEIPM program.
At paragraph (a), we are proposing the requirements
associated with HHS' responsibility to notify the State Exchanges prior
to the start of the measurement year regarding information pertinent to
the SEIPM program and the program's upcoming measurement cycle, which
may include but would not be limited to review criteria; key changes
from prior measurement cycles, where applicable; or other modifications
regarding specific SEIPM activities. This notification would occur
during the benefit year (that is, the year under review for which data
would be collected), which immediately precedes the measurement year
(that is, the year in which the measurement will be completed). The
measurement cycle would conclude with the reporting year during which
all data issues would be resolved and the improper payment rate would
be calculated and published.
At paragraph (b), we are proposing the requirements
associated with HHS' responsibility to notify the State Exchanges prior
to the measurement year regarding SEIPM schedules, which will include
relevant timelines. For example, among other things, the SEIPM annual
program schedule would detail the time period during which HHS would
provide the SEIPM data request form to State Exchanges with
instructions regarding how to complete each part of the form. The SEIPM
annual program schedule would also provide the deadlines prescribed for
State Exchanges to complete each part of the form.
At paragraph (c), we are proposing the requirements
associated with information to be provided by State Exchanges to HHS
regarding the operations and policies of the State Exchange, and
changes that have been made by the State Exchange which could impact
the SEIPM review process such as changes to business rules, business
practices, policies, and information systems (for example, data
elements and table relationships), which are used to review the State
Exchange's execution of consumer verifications, verification
inconsistency resolutions, eligibility determinations, enrollment
management, and APTC calculations. HHS anticipates that State Exchanges
may make changes periodically that could affect a State Exchange's
eligibility determinations or other decisions relating to the SEIPM
program. For example, HHS would need to be made aware of changes to the
State Exchange's technical platform or modifications to its policies or
procedures as these changes may impact specific review criteria, the
data to be reviewed and ultimately a State Exchange's eligibility
determinations. Other decisions or changes by a State Exchange could
affect the SEIPM program, including any changes regarding items such as
naming conventions or definitions of specific data elements used in the
SEIPM program, since any lack of clarity in how determinations and
payment calculations are being made could impact HHS' decisions
regarding errors made by the State Exchanges.
c. Data Collection (Sec. 155.1510)
We are proposing to add new Sec. 155.1510 to address the data
collection requirements to support the SEIPM process. Consistent with
this, we are establishing an SEIPM data request form that would
incorporate two basic parts: (1) The pre-sampling data request; and (2)
the sampled unit data request. We would use this form to compile
information from each State Exchange in an ongoing manner.
At paragraph (a)(1), we are proposing the requirement that
the State Exchange annually provide pre-sampling data to HHS by the
deadline provided in the annual program schedule. The pre-sampling data
request would provide HHS with essential information about the
composition of the State Exchange's application population in order to
appropriately stratify and sample the population. In the pre-sampling
data request, HHS would provide each State Exchange with a list of
policy identifications (that is, policy ID, which is a unique
identifier for a policy) that would have been analyzed to produce an
aggregate applied APTC greater than $0. HHS would request each State
Exchange to map the given policy IDs for their State Exchange to a tax
household identifier (or a proxy if the State Exchange does not have an
equivalent identifier) and provide characteristics of the population,
which include counts of (or an indication of the presence in) different
verification inconsistency types and the number of tax household
members. HHS would then analyze these characteristics and select a
statistically valid sample according to OMB requirements for estimating
improper payments. For these sampled units, HHS would also request
associated application and enrollment data and supporting consumer
documentation, which will be used to conduct its review. HHS has
submitted a PRA package to OMB for approval as detailed in ICR sections
IV.G.1. and 2 of this proposed rule.
As explained below in section IV, Collection of Information
Requirements, the SEIPM data request form has been submitted to the OMB
for review and approval. The pre-sampling data are a building block for
the development of the sampled unit data, which associate consumer
attestation documentation to each sampled unit. As such, the timely
receipt of the completed pre-sampling data from the State Exchange is
imperative.
The cumulative sample size across all State Exchanges and the
associated State Exchange-specific sample size would be determined
using a statistically valid sampling and estimation methodology, in a
manner that is consistent with Appendix C of OMB Circular A-123 and
that would be designed to produce an aggregate estimated improper
payment rate across all State Exchanges with a 3 percent margin of
error and a 95 percent confidence interval.\282\ HHS researched various
sampling methodologies, for example, simple random sampling, stratified
random sampling, and probability proportional to size sampling, taking
into account level of burden, (for example, time and resources), on
State Exchanges as well as enabling meaningful reviews for each State
Exchange. Based on information currently available, we expect that a
sample size of approximately 100 tax households for each State Exchange
will be necessary to achieve this precision level. HHS will provide
State Exchanges with an annual program notification that may include
sampling methodology and sample size. Burden estimates contained within
this document have been created using that sample size estimate. There
are a variety of factors that we may consider each review cycle to
determine the sample size and
[[Page 657]]
methodology. Such factors may include the size of the State Exchange
measured either by the number of payments or by the total dollar
amount, specific factors that drive the improper payment rate, the
number of State Exchanges under measurement for a given review cycle,
or improper payment rates and margins of error from previous benefit
years. Regardless of potential variations from one review cycle to the
next, we would continue to use a methodology that supports
statistically valid sampling and estimation.
---------------------------------------------------------------------------
\282\ While OMB Memorandum M-21-19, dated March 5, 2021 at
https://www.whitehouse.gov/wp-content/uploads/2021/03/M-21-19.pdf no
longer includes the requirements of a 95 percent confidence interval
or a 3% margin of error, we are using those measures that were
included in Appendix C to the OMB circular prior to the 2021
changes.
---------------------------------------------------------------------------
As stated previously, we would provide to each State
Exchange an SEIPM data request form that includes the sampled unit data
request. At paragraph (a)(2) we are proposing the requirement that
annually the State Exchange provide to HHS, in a manner and within a
deadline specified by HHS in the annual program schedule, sampled unit
data. To meet this requirement, a State Exchange can submit consumer-
submitted documentation in one or more batches so long as all of the
batches are provided to HHS within the deadline specified in the annual
program schedule. The sampled unit data request would include the list
of sampled units and the associated information specific to each unit.
The information required for the sampled units would include data and
supporting documentation regarding various State Exchange functions,
for example, electronic verifications, manual reviews of data matching
inconsistencies, special enrollment period verifications, eligibility
determinations, redeterminations, enrollment reconciliation, and plan
management.
At paragraph (b), we are proposing language regarding
requests for extension which may be submitted by State Exchanges. Given
the importance of the time frames associated with the measurement
process, we do not anticipate granting extensions in most situations.
The approval of extension requests would be reserved for extreme
circumstances that directly impact operations of the particular State
Exchange. This includes situations such as natural disasters,
interruptions in business operations such as major system failures, or
other extenuating circumstances.
At paragraph (c), we are proposing language regarding
potential consequences as a result of a State Exchange's failure to
timely provide the information in accordance with the schedule and
deadlines detailed in the annual program schedule, or in response to a
request for extension in paragraph (b). As a result of not timely
providing required data, we may cite errors due to lack of
documentation to support the state's eligibility or payment decisions,
inadvertently resulting in an increase in the State Exchange's improper
payment rate.
d. Review Process and Improper Payment Rate Determination (Sec.
155.1515)
We are proposing to add new Sec. 155.1515 to address the review
process and the determination of the improper payment rate.
At paragraph (a), we are proposing that HHS would keep a
record of the status of receipt for information requested from each
State Exchange for a minimum of 10 years.
At paragraph (b), we are proposing to review the following
for compliance with subparts D and E of part 155: A State Exchange's
determinations regarding eligibility for and enrollment in a QHP; APTC,
including the calculation of APTC; redeterminations of eligibility
determinations during a benefit year; and annual eligibility
redeterminations. As part of the review process, HHS would issue error
findings decisions and render redeterminations of error findings
decisions within the timeframe specified in the annual program
schedule.
At paragraph (c), we are proposing to notify each State
Exchange of HHS' error findings decisions for that State Exchange and
HHS' calculation of that State Exchange's improper payment rate.
e. Error Findings Decisions (Sec. 155.1520)
We are proposing to add new Sec. 155.1520 to address the issuance
of error findings decisions and the content of error findings
decisions.
At paragraph (a), we are proposing that HHS will issue
error findings decisions to each State Exchange. While we anticipate
that error findings decisions would be issued at regular and recurring
points of time within the measurement year during each review cycle, we
recognize that certain events could result in necessary delays, for
example, public health emergencies, natural disasters, interruptions in
business practices, or other extenuating circumstances. Thus, should
these types of events warrant additional time, we would notify State
Exchanges of the delay via the CMS website. In the situation where no
errors are found during the course of the review, HHS will still issue
an error findings decision to the State Exchange indicating that no
errors were identified. The error findings decisions are intended to be
communicated to each respective State Exchange only and would not be
published publicly.
At paragraph (b), we are proposing language regarding the
specific information that would be included in error findings
decisions. We propose that, at a minimum, error findings decisions will
include HHS' findings regarding errors made by the State Exchange and
information about the State Exchange's right to request a
redetermination of the error findings decision in accordance with
proposed Sec. 155.1525. We anticipate that these are the key items to
be conveyed through the error findings decision. However, should we
determine that other information is warranted, the language of proposed
Sec. 155.1520 does not prohibit additional information from being
included within the error findings decision.
f. Redetermination of Error Findings Decisions (Sec. 155.1525)
We are proposing to add new Sec. 155.1525 to address a State
Exchange's request for a redetermination as well as HHS' issuance of
the redetermination decision and the content of that decision.
At paragraph (a), we are proposing language indicating a
State Exchange's ability to request a redetermination of the error
findings decision within the deadline prescribed in the annual program
schedule. During the period for a State Exchange to request a
redetermination of the error findings decision, HHS would consider a
request for an extension in extreme circumstances, which includes but
is not limited to situations such as natural disasters, interruptions
in business operations such as major system failures, or other extreme
circumstances. While we recognize that each State Exchange has a
multitude of responsibilities, HHS would not otherwise accept any
request for a redetermination received after the expiration of the
deadline prescribed by the annual program schedule, which is designed
to enable HHS to meet deadlines for publication of the improper payment
rate.
At paragraph (a)(1), we are proposing language requiring
that the State Exchange identify the specific error(s) for which the
State Exchange is requesting a redetermination. This identification may
pertain to a single individual's application or to a type of error
affecting a class of applications. Since this redetermination
constitutes a review of the initial decision and not a de novo
investigation, the State Exchange must base its request on
documentation and other information
[[Page 658]]
already submitted to HHS (for example, if the application lacked income
information, the State Exchange may not retrospectively seek this
documentation and add it to the record). Any issues that do not relate
to an error identified by HHS in the initial error findings decision
would not be addressed.
At paragraph (a)(2), we are proposing language that the
State Exchange must include all data and information that support the
State Exchange's request for a redetermination. Note that while State
Exchanges are able to submit data and information in requesting a
redetermination, new information submitted as part of the request for
redetermination should supplement data previously submitted as part of
the SEIPM data request form for the benefit year under review and would
be accepted at HHS' discretion. State Exchanges may not use the
redetermination process as a means to circumvent prior deadlines for
submitting data or information to HHS.
At paragraph (a)(3), we are proposing language that would
require a State Exchange to provide an explanation of how the data and
information submitted under paragraph (a)(2) pertains to the error(s)
identified in the error findings decision. The State Exchange should
clearly articulate how the data and information is related to HHS'
findings, and also how it impacts HHS findings. If a State Exchange
does not provide this explanation, HHS would not anticipate or assume a
State Exchange's reasoning in requesting a redetermination on a
particular error.
At paragraph (b), we are proposing language regarding the
issuance of redetermination decision. The redetermination of an error
findings decision would be issued within the deadline prescribed in the
annual program schedule. Our goal is to ensure that each State Exchange
has ample time to assess the error findings decision, give HHS adequate
time to thoroughly evaluate a State Exchange's request for a
redetermination, and calculate an improper payment rate in adequate
time to publish aggregate findings across all State Exchanges in the
Agency Financial Report. As with the error findings decision, we
anticipate HHS' redetermination decisions would be issued at regular
and recurring points of time within the measurement year during each
review cycle and in accordance with the annual program schedule.
However, we also recognize that certain circumstances could result in
necessary delays, for example, public health emergencies, natural
disasters, interruptions in business operations, or other extenuating
circumstances. Thus, we are proposing that if these types of
circumstances result in HHS needing additional time to render the
redetermination decisions, a state Exchange would be notified of the
delay.
At paragraph (c), we are proposing language conveying the
minimum content requirements for HHS' redetermination decision.
At paragraph (c)(1), we are proposing language specifying
that HHS' decision must address its findings regarding the impact of
any additional data and information provided by the State Exchange on
the error(s) for which the State Exchange requested a redetermination.
At paragraph (c)(2), we are proposing language that would
establish HHS' responsibility to give a State Exchange information
about the right to request an appeal of the redetermination of error
findings decision in accordance with proposed Sec. 155.1530.
g. Appeal of Redetermination Decision (Sec. 155.1530)
We are proposing to add new Sec. 155.1530 to address a State
Exchange's ability to request an appeal of the redetermination
decision. Appeals will be administered by HHS.
At paragraph (a), we are proposing language regarding a
State Exchange's right to request an appeal of a redetermination within
the deadline prescribed in the annual program schedule. Moreover, we
are proposing that, in the request for an appeal, the State Exchange
must indicate the specific error(s) identified in the redetermination
decision for which the State Exchange is requesting an appeal. In
accordance with proposed Sec. 155.1530(d), which specifies that
findings would be restricted to those errors for which a
redetermination was sought, this proposed language also indicates that
a State Exchange is prohibited from requesting an appeal of any
error(s) that were not specified in a State Exchange's redetermination
request.
At paragraph (b), we are proposing language that conveys
the appeal entity's review would be an on-the-record review, meaning
that the appeal entity would only review data and information provided
at the time of a State Exchange's redetermination request. No
additional new data or information submitted in support of the request
for appeal would be considered.
At paragraph (c), we are proposing language that the
appeal decision would be issued within the deadline prescribed in the
annual program schedule. Again, as with the earlier time frames set in
the annual program schedule, the time frame for appeal allows HHS
adequate time to review information provided by the State Exchange,
assess errors, and calculate an improper payment rate in adequate time
to publish findings in the Agency Financial Report. We also acknowledge
that unforeseen circumstances could result in necessary delays in the
issuance of the appeal decision for example, public health emergencies,
natural disasters, interruptions in business practices, or other
extenuating circumstances. Thus, we are proposing that if these types
of circumstances necessitate the appeals entity's need for additional
time in rendering an appeal decision, the State Exchange would be
notified about the delay.
At paragraph (d), we are proposing the content of the
appeal decision.
At paragraph (d)(1), we are proposing that the appeal
decision would include the final disposition of the on-the-record
review and that findings would be restricted to those error(s) for
which an appeal was sought.
At paragraph (d)(2), we are proposing that the appeal
decision would include the estimated improper payment rate for the
State Exchange.
At paragraph (e), we are proposing that upon completion of
the review and the closure of all appeals, HHS would issue to each
individual State Exchange, a report containing the error findings and
the estimated improper payment rate for their respective program. That
report will not be made public. The estimated improper payment rates
for each State Exchange will be used to estimate an aggregate improper
payment rate across all State Exchanges. That aggregate rate will be
published in the agency's Annual Financial Report.
h. Corrective Action Plan (Sec. 155.1535)
We propose to add new Sec. 155.1535 to address the scenario in
which a State Exchange's improper payment rate for a given benefit
year, in HHS's reasonable discretion, necessitates a CAP to correct the
causes of any payment errors. Our goal is to lay out a set of minimum
requirements in future rulemaking, using the standards provided under
Appendix C to OMB Circular No. A-123, to support State Exchanges in
satisfying the requirement of developing, implementing, and monitoring
a CAP. Otherwise, State Exchanges should have the flexibility to
conduct these activities in a manner that is tailored to their specific
needs, including any standard practices, policies and procedures, or
business needs. We also anticipate that there
[[Page 659]]
would be collaboration required between HHS and the State Exchange to
ensure the effectiveness of any CAP, and we underscore the importance
of maintaining open lines of communication on significant CAP-related
updates. As needed, a State Exchange should be prepared to consult with
HHS and provide timely responses to any requests for clarification or
additional information regarding the CAP.
As we gather additional information and data, and observe trends
based on experience with implementing the SEIPM program, we will detail
CAP parameters or requirements in future rulemaking. We note, as well,
that the first improper payment report would not be released until
November 2025 at the earliest, and so the first SEIPM program CAP
likely would not be due until early 2026.
At paragraph (a), we propose that, depending on a State
Exchange's error rate for a given benefit year, we may require the
State Exchange to develop and submit a CAP to HHS to correct errors
resulting in improper payments. In future rulemaking, we may define a
threshold error rate, dollar amount, or other scenarios that could
necessitate a CAP. We do not, however, anticipate that these standards
would deviate significantly from the standards of other improper
payment measurement programs, such as the standards under the Medicaid
and CHIP Payment Error Rate Measurement (PERM) program.
At paragraph (b), we propose that Appendix C to OMB
Circular No. A-123 would serve as a minimum set of guidelines to any
State Exchange that is developing a CAP. The State Exchange otherwise
has broad discretion to utilize a format tailored to its specific
needs, so long as it can demonstrate that the CAP is effectively and
timely correcting error causes.
At paragraph (c), we propose that a State Exchange would
be required to develop an implementation schedule to accompany its CAP,
and implement any CAP initiatives in accordance with that schedule. In
conjunction with completing CAP initiatives timely, a State Exchange
would be required to regularly evaluate whether those initiatives are
effective at correcting errors identified. It is critical that the
State Exchange maintains regular communications with HHS of any
evaluation findings, particularly for any CAP initiatives that are not
correcting errors. In this situation a State Exchange may need to
revise or discontinue these initiatives, or develop new ones.
At paragraph (d), we propose the recourse HHS has in the
event that a State Exchange that is required to submit a CAP fails to
timely do so by stating that HHS may take actions consistent with Sec.
155.1540.
i. Failure To Comply (Sec. 155.1540)
We propose to add new Sec. 155.1540 that would address failures to
comply with SEIPM requirements. At paragraph (a), we propose that HHS
would have discretion to address failures of compliance with audit data
submission and CAP requirements contained in subpart P, consistent with
authorities HHS possesses under title I of the ACA or any other Federal
law.
Based on experiences with other audit programs, HHS is of the view
that without measures to ensure State Exchanges' compliance with SEIPM
requirements, the audit program could easily become frustrated and
inefficient, needlessly burdensome to the government and wasteful of
government funds and resources, as well as ineffective to detect and
prevent improper payments of APTC in State Exchanges. HHS finds that
such failures would undermine or prohibit HHS's efficient
administration of Exchange activities, including the administration of
APTC. For this reason, we propose that if a State Exchange fails to
substantially comply with the data collection requirements or the CAP
provisions contained in subpart P, HHS may implement measures or
procedures in relation to the State Exchange that HHS determines are
appropriate to secure compliance with data collection and CAP
provisions contained in subpart P of this part, and to detect, prevent,
or reduce abuses in the administration of APTC under title I of the
ACA, so long as such actions are within HHS's authorities under title I
of the ACA or any other Federal law.
The ACA grants HHS broad discretion to ensure the effective and
efficient administration of Exchange activities through audits and
other authorized means, such as those HHS proposes in this rule to
support its compliance with the PIIA.\283\ Section 1313(a)(5) of the
ACA authorizes HHS to implement any measure or procedure it determines
appropriate to reduce fraud and abuse in the administration of title I
of the ACA, which includes the conduct of APTC eligibility
determinations and the administration of APTCs. HHS is considering
exercising this authority to ensure State Exchange compliance with
SEIPM program data collection and CAP requirements. For instance, upon
a State Exchange's failure to substantially comply with data collection
requirements, HHS could require the State Exchange to provide on-site
access to required data and Exchange personnel capable of displaying
requested data directly to HHS personnel or contractors.\284\ If a
State Exchange failed to substantially comply with requirements under
an existing CAP, HHS could require the State Exchange to revise the CAP
and its related implementation plan to contain revised or additional
requirements specifically designed to address the State Exchange's
compliance failures and ensure the State Exchange's future compliance
with CAP requirements. We seek comment on these measures and invite
suggestions for other measures HHS might undertake in relation to State
Exchanges to incentivize compliance with data collection and CAP
requirements (or cure non-compliance) and to ensure the efficient
administration of APTCs.
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\283\ Although proposed Sec. 155.1540 and other rules we
propose to codify in part 155, subpart P, are specifically intended
to support compliance with requirements under the PIIA, section
1313(a)(3) also authorizes HHS to subject State Exchanges to annual
financial audits.
\284\ See, for example, section 1313(a)(2) of the ACA (HHS may
investigate the affairs of an Exchange, may examine the properties
and records of an Exchange, and may require periodic reports in
relation to activities undertaken by an Exchange, and an Exchange
must fully cooperate in any investigation conducted under this
paragraph).
---------------------------------------------------------------------------
We note that if the proposed SEIPM program requirements are
finalized, HHS does not anticipate broad or willful noncompliance with
data collection and CAP requirements by State Exchanges. Rather, we
expect that HHS and State Exchanges would continue to work
collaboratively to ensure the accuracy and integrity of APTC
eligibility determinations and payments during SEIPM audits. Where a
State Exchange's compliance failure is due to impediments outside of
the Exchange's control or due to its need for technical assistance, HHS
would provide such technical assistance and, when appropriate, could
grant reasonable accommodations (such as additional time to submit data
or implement elements of a CAP), in order to provide the State Exchange
the resources and support it needs to meet SEIPM audit requirements.
Considering the extremely close working relationships between HHS and
State Exchanges and their combined interests in ensuring the integrity
of APTC eligibility determinations, HHS does not anticipate that it
would need to exercise its authority under title I of the ACA to impose
financial penalties for substantial noncompliance resulting from
serious or willful noncompliance with SEIPM requirements. Rather, we
[[Page 660]]
expect that such penalties would be necessary to address only the most
egregious situations that would amount to serious misconduct in
relation to a State Exchange's administration of APTCs and its failure
to comply with audit requirements.\285\
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\285\ See, for example, section 1313(a)(4) of the ACA (in such
cases, the Secretary may rescind from payments due to the State an
amount not to exceed one percent of such payments until corrective
actions are taken by the State and determined to be adequate by the
Secretary).
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We invite comment on these proposals.
E. Part 156--Health Insurance Issuer Standards Under the Affordable
Care Act, Including Standards Related to Exchanges
1. FFE and SBE-FP User Fee Rates for the 2023 Benefit Year (Sec.
156.50)
Section 1311(d)(5)(A) of the ACA permits an Exchange to charge
assessments or user fees on participating health insurance issuers as a
means of generating funding to support its operations. If a state does
not elect to operate an Exchange or does not have an approved Exchange,
section 1321(c)(1) of the ACA directs HHS to operate an Exchange within
the state. Accordingly, in Sec. 156.50(c), we specified that a
participating issuer offering a plan through an FFE or SBE-FP must
remit a user fee to HHS each month that is equal to the product of the
annual user fee rate specified in the annual HHS notice of benefit and
payment parameters for FFEs and SBE-FPs for the applicable benefit year
and the monthly premium charged by the issuer for each policy where
enrollment is through an FFE or SBE-FP.
OMB Circular No. A-25 established federal policy regarding user
fees; it specifies that a user fee charge will be assessed against each
identifiable recipient of special benefits derived from federal
activities beyond those received by the general public.
a. FFE User Fee Rates for the 2023 Benefit Year
Activities performed by the federal government that do not provide
issuers participating in an FFE with a special benefit are not covered
by the FFE user fee. As in benefit years 2014 through 2022, issuers
seeking to participate in an FFE in the 2023 benefit year will receive
two special benefits not available to the general public: (1) The
certification of their plans as QHPs; and (2) the ability to sell
health insurance coverage through an FFE to individuals determined
eligible for enrollment in a QHP. For the 2023 benefit year, issuers
participating in an FFE will receive special benefits from the
following federal activities:
Provision of consumer assistance tools;
Consumer outreach and education;
Management of a Navigator program;
Regulation of agents and brokers;
Eligibility determinations;
Enrollment processes; and
Certification processes for QHPs (including ongoing
compliance verification, recertification, and decertification).
To provide additional transparency into HHS' user fee calculation,
we set forth below the costs, premium, and enrollment projections that
went into calculating the proposed 2023 FFE user fee rates based on the
best available data at the time of this proposed rulemaking, to the
extent that none of this information is considered proprietary for
issuers or confidential for the federal government. For the 2023
benefit year, we anticipate that spending on consumer outreach and
education, eligibility determinations, and enrollment process
activities will increase by approximately $140 million above the 2022
benefit year level. We anticipate spending on consumer assistance
tools, management of a Navigator program, regulation of agents and
brokers, and certification of QHPs activities will be similar to what
was estimated for the 2022 benefit year. We do not anticipate any new
services or contracts will fall under the FFE user fees for the 2023
benefit year.
Additionally, we considered a range of premium and enrollment
projections in setting the proposed 2023 benefit year FFE user fee
rates.\286\ The weighted average premium projections that we considered
ranged from $618 to $625 per month. The annual enrollment percentage
change projections that we considered ranged from -1 percent to 2
percent. We took a number of factors into consideration in choosing
which premium and enrollment projections should inform the proposed
2023 FFE user fee rates. The assumption that the enhanced premium tax
credit subsidies in section 9661 of the ARP will expire after the 2022
benefit year significantly influenced our development of the 2023
enrollment and premium projections.\287\ We expect the expiration of
this provision of the ARP to revert enrollment and premium projections
to the pre-ARP level observed in the 2020 benefit year. Our 2023
enrollment estimates also account for the 2021 benefit year transition
(and projected transitions through the 2023 benefit year) of states
from FFEs or SBE-FPs to State Exchanges, as well as the enrollment
impacts of section 1332 state innovation waivers. We project that 2023
benefit year premiums will generally increase at the rate of medical
inflation after expiration of the enhanced premium tax credit subsidies
in section 9661 of the ARP. After considering the range of costs,
premium and enrollment projections, we propose a 2023 user fee rate
that will not result in a substantial increase to consumer premiums
from prior years, and that also ensures adequate funding for federal
Exchange operations.
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\286\ We used the most recent projections from the Congressional
Budget Office, the Office of Management and Budget, the Office of
the Actuary, and the Office of Financial Management.
\287\ Public Law 117-2.
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As such, based on estimated costs, enrollment, and premiums for the
2023 benefit year, we propose a 2023 benefit year user fee rate for all
participating FFE issuers of 2.75 percent of total monthly premiums.
This is the same user fee rate that we established for the 2022 benefit
year.\288\ We seek comment on this proposal.
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\288\ Part 3 of the 2022 Payment Notice (86 FR 53412).
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b. SBE-FP User Fee Rates for the 2023 Benefit Year
As discussed above, OMB Circular No. A-25 established federal
policy regarding user fees, and specified that a user charge will be
assessed against each identifiable recipient for special benefits
derived from federal activities beyond those received by the general
public. SBE-FPs enter into a Federal platform agreement with HHS to
leverage the systems established for the FFEs to perform certain
Exchange functions, and to enhance efficiency and coordination between
state and federal programs. Accordingly, in Sec. 156.50(c)(2), we
specified that an issuer offering a plan through an SBE-FP must remit a
user fee to HHS, in the timeframe and manner established by HHS, equal
to the product of the monthly user fee rate specified in the annual HHS
notice of benefit and payment parameters for the applicable benefit
year and the monthly premium charged by the issuer for each policy
where enrollment is through an SBE-FP, unless the SBE-FP and HHS agree
on an alternative mechanism to collect the funds from the SBE-FP or
state instead of direct collection from SBE-FP issuers.
The benefits provided to issuers in SBE-FPs by the federal
government include use of the federal Exchange
[[Page 661]]
information technology and call center infrastructure used in
connection with eligibility determinations for enrollment in QHPs and
other applicable state health subsidy programs, as defined at section
1413(e) of the ACA, and QHP enrollment functions under 45 CFR part 155,
subpart E. The user fee rate for SBE-FPs is calculated based on the
proportion of user fee eligible FFE costs that are associated with the
FFE information technology infrastructure, the consumer call center
infrastructure, and eligibility and enrollment services, and allocating
a share of those costs to issuers in the relevant SBE-FPs. To calculate
the proposed SBE-FP rates for the 2023 benefit year, we used the same
assumptions on contract costs, enrollment, and premiums as the proposed
FFE user fee rates. We calculated the SBE-FP user fee rate based on the
proportion of all FFE functions that are also conducted for SBE-FPs.
The final SBE-FP user fee rate for the 2022 benefit year of 2.25
percent of premiums was based on HHS' calculation of the percent of
costs of the total FFE functions utilized by SBE-FPs--the costs
associated with the information technology, call center infrastructure,
and eligibility determinations for enrollment in QHPs and other
applicable state health subsidy programs, which we estimate to be
approximately 80 percent. Based on this methodology, we propose to
charge issuers offering QHPs through an SBE-FP a user fee rate of 2.25
percent of the monthly premium charged by the issuer for each policy
under plans offered through an SBE-FP for the 2023 benefit year. This
is the same user fee rate that we established for the 2022 benefit
year. We seek comment on this proposal.
2. User Fees for FFE-DE and SBE-FP-DE States
Consistent with the removal of Sec. 155.221(j) and the repeal of
the Exchange DE option in part 3 of the 2022 Payment Notice,\289\ we
propose a technical correction to remove from Sec. 156.50 all
references to the Exchange DE option and cross-references to Sec.
155.221(j). In that rule, we also finalized the repeal of the
accompanying user fee rate for FFE-DE and SBE-FP-DE states for 2023;
however, HHS inadvertently did not amend the accompanying regulatory
text in Sec. 156.50 related to the Exchange DE option user fees.\290\
As such, we propose to make conforming changes to Sec. 156.50(c) and
(d) to remove all references to the Exchange DE option and Sec.
155.221(j). Specifically, we propose to remove Sec. 156.50(c)(3), and
amend Sec. Sec. 156.50(d)(1); (d)(2)(i)(A) and (B); (d)(2)(ii);
(d)(2)(iii)(B); (d)(3); (d)(4); (d)(6); and (d)(7) to remove the
references to the Exchange DE option. We seek comment on these proposed
technical amendments.
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\289\ 86 FR 53412 at 53424-53429, 53445. We also clarified that
the repeal of the Exchange DE option is specific to removing the
Exchange DE option codified at Sec. 155.221(j) and the accompanying
FFE-DE and SBE-FP-DE user fees, and that the other federal
requirements applicable to the FFE DE Pathways, as outlined in
Sec. Sec. 155.220, 155.221, and 156.1230, remain intact. See 86 FR
at 53427.
\290\ 86 FR at 53429.
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3. State Selection of EHB-Benchmark Plan for Plan Years Beginning on or
After January 1, 2020 (Sec. 156.111)
a. States' EHB-Benchmark Plan Options
At Sec. 156.111(a), we allow a state to modify its EHB-benchmark
plan by: (1) Selecting the EHB-benchmark plan that another state used
for PY 2017; (2) replacing one or more EHB categories of benefits in
its EHB-benchmark plan used for PY 2017 with the same categories of
benefits from another state's EHB-benchmark plan used for PY 2017; or
(3) otherwise selecting a set of benefits that would become the state's
EHB-benchmark plan. In implementing this section, we stated in the 2019
Payment Notice that we would propose EHB-benchmark plan submission
deadlines in the HHS annual Notice of Benefit and Payment Parameters.
Since we finalized that rule, we have set an early-May deadline for
the submission of EHB-benchmark plans by states for each year from PY
2021-2024.\291\ We believe that requiring these submissions in the
first week of May that is two years before the effective date of the
new EHB-benchmark plan has worked well. The feedback received from
states that have submitted new EHB-benchmark plans indicates that this
timeframe provides the states with enough time to prepare EHB-benchmark
submissions. It also provides CMS with sufficient time to review and
respond to these submissions in advance of issuers needing to make
changes to plan design to conform with EHB changes.
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\291\ For PY 2021, the deadline was May 6, 2019 (see 84 FR at
17534); for PY 2022, it was May 8, 2020 (84 FR at 17534); for PY
2023, it was May 7, 2021 (85 FR at 29226); for PY 2024 it is May 6,
2022 (86 FR at 24232).
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Thus, we do not believe it is necessary to continue proposing
deadlines for EHB-benchmark submissions under Sec. 156.111 in each
annual Notice of Benefit and Payment Parameters. We believe that it is
in the interest of states and issuers that we formalize a consistent,
permanent annual deadline in early-May for EHB-benchmark submissions.
Accordingly, we propose that the first Wednesday in May that is two
years before the effective date of the new EHB-benchmark plan to be the
deadline for states to submit the required documents for the state's
EHB-benchmark plan selection for that PY. For example, under this
proposal, the deadline for PY 2025 would be May 3, 2023, and the
deadline for PY 2026 would be May 4, 2024. We propose corresponding
edits to Sec. 156.111(d) and (e) to reflect this proposed deadline.
If finalized, this proposed deadline would obviate the need to
propose deadlines in future annual Notices of Benefit and Payment
Parameters. We invite comment on this approach, including whether there
are any unforeseen consequences to establishing this perpetual
deadline.
We again emphasize that this would be a firm deadline, and that
states should optimally have one of their points of contact who has
been predesignated to use the EHB Plan Management Community reach out
to us using the EHB Plan Management Community well in advance of the
deadline with any questions. Although not a requirement, we recommend
states submit applications at least 30 days prior to the submission
deadline to ensure completion of their documents by the proposed
deadline. We also remind states that they must complete the required
public comment period and submit a complete application by the
deadline. We seek comment on the proposed deadline.
b. Annual Reporting of State-Required Benefits
In the 2021 Payment Notice, we amended Sec. 156.111(d) and added
paragraph (f) to require states to annually notify HHS in a form and
manner specified by HHS, and by a date determined by HHS, of any state-
required benefits applicable to QHPs in the individual or small group
market that are considered to be ``in addition to EHB'' in accordance
with Sec. 155.170(a)(3) and any benefits the state has identified as
not in addition to EHB and not subject to defrayal, describing the
basis for the state's determination.
Under this requirement, a state's submission must describe all
benefits requirements under state mandates applicable to QHPs in the
individual or small group market that were imposed on or before
December 31, 2011, and that were not withdrawn or otherwise no longer
effective before December 31, 2011, as well as all benefits
requirements under state mandates that were imposed any time after
December
[[Page 662]]
31, 2011, applicable to the individual or small group market. The
state's report is also required to describe whether any of the state
benefit requirements in the report were amended or repealed after
December 31, 2011. Information in the state's report is required to be
accurate as of the day that is at least 60 days prior to the annual
reporting submission deadline set by HHS.
Pursuant to Sec. 156.111(d)(2), if the state does not notify HHS
of its required benefits considered to be in addition to EHB by the
annual reporting submission deadline, or does not do so in the form and
manner specified by HHS, HHS will identify which benefits are in
addition to EHB for the state for the applicable PY.
In the 2021 Payment Notice, we finalized July 1, 2021 as the first
deadline for states to submit annual reports to HHS. Additionally, in
the 2022 Payment Notice, HHS finalized July 1, 2022 as the deadline for
states to submit to HHS their annual reports for the second year of
annual reporting. However, we simultaneously announced our intent to
exercise enforcement discretion with regard to the first annual
reporting submission deadline of July 1, 2021 due to delays in
finalizing the reporting templates that states are required to use for
their submissions, delays in issuing additional technical assistance on
defrayal, and the added burden of the COVID-19 PHE on states. Pursuant
to this enforcement posture, we explained that we would not take
enforcement action against states that do not submit an annual report
in 2021. Rather, we would begin enforcing the annual reporting
requirement on July 1, 2022.
Since finalizing the annual reporting requirement in the 2021
Payment Notice, we have received consistent feedback from states and
stakeholders restating the concerns raised by the majority of public
comments on the annual reporting requirement in the 2021 and 2022
Payment Notices. Although we received some comments agreeing that this
policy is important to ensure states are defraying state benefit
requirements consistently, most commenters objected to the policy as
unnecessary, burdensome on states, and without adequate justification.
Several commenters explained that, contrary to HHS' concerns expressed
in the 2021 and 2022 Payment Notices, states are already regularly
making careful assessments about whether their state benefit
requirements are in addition to EHB and are doing so in accordance with
federal requirements. Commenters opposing the reporting policy as
unnecessary also stated that existing regulations already establish
robust requirements for states and issuers to follow when a state
benefit requirement is in addition to EHB and requires defrayal,
including performing actuarially sound analyses of costs associated
with state benefit requirements in addition to EHB when calculating
APTCs. Commenters noted that HHS already has existing authority to
investigate states that are not complying with defrayal requirements
and that, as such, imposing a reporting requirement on states is not
necessary for federal oversight purposes. Other commenters expressed
concern about the lack of transparency around the annual reporting and
review process, requesting that HHS delay the reporting requirement
until HHS provides further clarification and releases additional
guidance clarifying its defrayal policies.
We have reassessed the value of the annual reporting policy in
light of these comments and other stakeholder feedback and believe it
is important to explore whether there may be ways to achieve compliance
with the defrayal policy without imposing a requirement on states to
submit detailed annual reports on state-required benefits. We therefore
propose to eliminate the requirement at Sec. 156.111(d) and (f) to
require states to annually notify HHS of any state-required benefits
applicable to QHPs in the individual or small group market that are
considered to be ``in addition to EHB'' and any benefits the state has
identified as not in addition to EHB and not subject to defrayal. We
also propose to revise the section heading to Sec. 156.111 to reflect
the proposed removal of the annual reporting requirements such that it
would instead read, ``State selection of EHB-benchmark plan for PYs
beginning on or after January 1, 2020.''
Under this proposal, we would continue to engage in technical
assistance with states to help ensure state understanding of when a
state-benefit requirement is in addition to EHB and requires defrayal.
We also intend to provide additional written technical assistance and
outreach to clarify the defrayal policy more generally and to provide
states with a more precise understanding of how HHS analyzes and
expects states to analyze whether a state-required benefit is in
addition to EHB pursuant to Sec. 155.170. We believe this approach
would still effectively promote state compliance with the defrayal
requirement in the interim as we reassess whether or when an annual
reporting policy may be warranted.
Although this proposal would relieve states of the annual reporting
requirements, it would not pend or otherwise impact the defrayal
requirements under section 1311(d)(3)(B) of the ACA, as implemented at
Sec. 155.170. Under this proposal, states remain responsible for
making payments to defray the cost of additional required benefits and
issuers are still responsible for quantifying the cost of these
benefits and reporting the cost to the state. We also note that the
obligation for a state to defray the cost of QHP coverage of state-
required benefits in addition to EHB is an independent statutory
requirement from the annual reporting policy finalized at Sec.
156.111(d) and (f).
We solicit comment on this proposal, including on whether we should
retain the reporting requirement or make it voluntary.
4. Provision of EHB (Sec. 156.115)
In the 2019 Payment Notice, we finalized flexibility through which
states may opt to permit issuers to substitute benefits between EHB
categories. In the preamble to that rule, we stated that this option
would promote greater flexibility, consumer choice, and plan innovation
through coverage and plan design options. Under this policy, a state
must notify HHS if will permit issuers to substitute benefits between
EHB categories by the deadlines specified by HHS in future Payment
Notices.
To date, no state has ever notified HHS that it would permit
issuers to substitute benefits between EHB categories. To our
knowledge, no state has ever even approached HHS to discuss the merits
of allowing this flexibility. In addition, we have received feedback
from consumer advocates that the potential for between-category
substitution could be particularly harmful to people living with
chronic conditions and disabilities. Given that this policy has never
been utilized, it has not promoted greater flexibility, consumer
choice, or plan innovation through coverage and plan design options as
intended. Rather, HHS is of the view that it may only create potential
harm for consumers with chronic conditions and disabilities.
Accordingly, whatever theoretical flexibility this policy could have
afforded to states, such untapped flexibility is not justified given
the potential negative effects on consumers. Thus, we propose to
withdraw this flexibility by amending Sec. 156.115 to no longer allow
states to permit issuers to substitute benefits between EHB categories.
In the event we do not finalize this proposal to eliminate the
state option
[[Page 663]]
for between-category substitution, we propose to publish in guidance
future deadlines for states to notify HHS that they wish to permit
issuers to substitute benefits between EHB categories. We believe that
it is in the interest of states and issuers that we establish a static,
permanent annual deadline for such notifications. Accordingly,
consistent with the deadline proposed for state submission of EHB-
benchmark plans, we propose the first Wednesday in May to be the
deadline for states to submit notifications to HHS that they wish to
permit issuers to substitute benefits between EHB categories for the PY
that is 2 years before the PY that the state wishes to permit. For
example, under this alternate proposal, the deadline for issuers to
notify HHS that they wish to permit issuers to substitute benefits
between EHB categories for PY 2025 would be May 3, 2023; and the
deadline for PY 2026 would be May 4, 2024. States wishing to make such
an election must continue to do so via the EHB Plan Management
Community. For additional discussion of this proposed deadline, see the
preamble to Sec. 156.111.
We seek comment on these proposals.
5. Prohibition on Discrimination (Sec. 156.125)
If the proposed nondiscrimination protections are finalized at
Sec. 156.200(e) that would explicitly prohibit discrimination based on
sexual orientation and gender identity; Sec. 156.125(b) would
accordingly require issuers providing EHB to comply with such
nondiscrimination requirements. Specifically, Sec. 156.125(b) states
that an issuer providing EHB must comply with the requirements of Sec.
156.200(e), which currently states that a QHP issuer must not, with
respect to its QHP, discriminate on the basis of race, color, national
origin, disability, age, or sex. Elsewhere in this rule we propose to
amend Sec. 156.200(e) to prohibit discrimination based on sexual
orientation and gender identity. HHS previously codified such
nondiscrimination protections at Sec. 156.200(e), simultaneously
requiring that issuers providing EHB comply with such requirements by
virtue of the cross-reference in Sec. 156.125(b) to Sec. 156.200(e).
However, amendments made in 2020 to Sec. 156.200(e) removed any
reference to sexual orientation and gender identity. If the proposals
at Sec. 156.200(e) are finalized, issuers providing EHB would again be
required under Sec. 156.125(b) to comply with nondiscrimination
protections in Sec. 156.200(e) that prohibit discrimination on the
basis of sexual orientation and gender identity.
In the March 27, 2012 Exchange Standards final rule, we finalized
Sec. 156.200(e) to also prohibit discrimination based on sexual
orientation and gender identity.\292\ In the February 2013 ``Patient
Protection and Affordable Care Act; Standards Related to Essential
Health Benefits, Actuarial Value, and Accreditation; Final Rule'' (EHB
final rule), we finalized at Sec. 156.125 that the nondiscrimination
requirements in Sec. 156.200 also apply to all issuers required to
provide coverage of EHB, thereby prohibiting discrimination based on
factors such as sexual orientation and gender identity.\293\ In the
2020 section 1557 final rule, HHS revised certain CMS regulations,
including Sec. 156.200(e), by removing sexual orientation and gender
identity as bases of discrimination subject to the CMS regulations'
nondiscrimination protections.\294\ As a result, Sec. 156.200(e)
currently prohibits a QHP issuer from discriminating on the basis of
race, color, national origin, disability, age, or sex with respect to
its QHP, but does not reference sexual orientation or gender identity.
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\292\ 77 FR 18310 (March 27, 2012).
\293\ 78 FR 12834 (February 25, 2013).
\294\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020
section 1557 final rule revised the following CMS regulations: 45
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
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CMS possesses statutory authority independent of section 1557 of
the ACA to prohibit discrimination in the small group and individual
markets pursuant to the authority to define EHB at section 1302(b) of
the ACA.\295\ The statute specifies that in defining EHB the Secretary
must take into account the health care needs of diverse segments of the
population, including women, children, persons with disabilities, and
other groups. The EHB requirements apply to non-grandfathered health
insurance coverage in the individual and small group markets under
section 2707(a) of the PHS Act. CMS has the authority to interpret and
implement these provisions under its general rulemaking authorities in
sections 1321(a)(1)(B) and (D) of the ACA and section 2792 of the PHS
Act. Pursuant to those authorities, HHS finalized in the EHB final rule
that Sec. 156.125 prohibits benefit discrimination on the grounds
articulated by Congress in section 1302(b)(4) of the ACA, as well as
those in Sec. 156.200(e), which at the time included race, color,
national origin, disability, age, sex, gender identity, and sexual
orientation. It is under that same exercise of authority here that
Sec. 156.125 would again prohibit discrimination on the basis of
sexual orientation and gender identity if the proposed changes to
include such factors in the nondiscrimination protections at Sec.
156.200(e) are finalized. Sections 1302(b) and 1321(a)(1)(B) and (D) of
the ACA and section 2707(a) and 2792 of the PHS Act are the same
authorities CMS relies upon for implementation of existing
nondiscrimination protections at Sec. 156.125. Utilizing these same
authorities to again prohibit discrimination based on sexual
orientation and gender identity at Sec. 156.125 by cross-reference to
the nondiscrimination protections at Sec. 156.200(e) would be
consistent with the authority CMS relies upon for the existing
protections at Sec. 156.125 that prohibit discrimination on the basis
of race, color, national origin, disability, age, or sex by cross-
reference to Sec. 156.200(e). We believe such protections are
warranted in light of the existing trends in health care discrimination
and are necessary to better address barriers to health equity for
LGBTQI+ individuals.
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\295\ 85 FR 37218-21 (June 19, 2020).
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A more in-depth discussion of these developments and other factors
considered in proposing amendments to CMS nondiscrimination protections
is included earlier in the preamble to Sec. 147.104 under section
III.B.1.b. of this preamble. For brevity, we refer back to Sec.
147.104 under section III.B.1.b. of the preamble rather than restating
the issues here.
We seek comment on this proposal.
a. Refine EHB Nondiscrimination Policy for Health Plan Designs (Sec.
156.125)
We propose refining the EHB nondiscrimination policy and propose a
clear regulatory framework for entities that are required to comply
with EHB nondiscrimination policy. This proposed refinement would not
only ensure consistent application of EHB nondiscrimination policy but
would also better safeguard consumers who depend on nondiscrimination
protections.
Under Sec. 156.125(a) an issuer does not provide EHB ``if its
benefit design, or the implementation of its benefit design,
discriminates based on an individual's age, expected length of life,
present or predicted disability, degree of medical dependency, quality
of life, or other health conditions.'' \296\ Section
[[Page 664]]
156.125(b) provides that issuers must also comply with Sec. 156.200(e)
which states that ``a QHP issuer must not, with respect to its QHP,
discriminate on the basis of race, color, national origin, disability,
age, or sex.'' \297\ Section 156.110(d) states that an EHB benchmark
plan may not include discriminatory benefit design that contravenes
Sec. 156.125. In the 2016 Payment Notice, we provided examples of
potentially discriminatory practices, and in the 2017 Payment Notice we
noted that we would consider providing further guidance regarding
discriminatory benefit designs in the future.\298\
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\296\ ACA section 1302(b)(4) prohibits discrimination based on
``age, disability, or expected length of life'' and requires that
benefits not be subject to denial based on ``age or expected length
of life, present or predicted disability, degree of medical
dependency, or quality of life.''
\297\ 45 CFR 156.200(e) states that a QHP issuer may not
discriminate based on ``race, color, national origin, disability,
age, or sex.''
\298\ 80 FR 10750 (Feb. 27, 2015). The examples of potentially
discriminatory practices were: (1) Attempting to circumvent coverage
of medically necessary benefits by labeling the benefit as a
``pediatric service,'' thereby excluding adults; (2) refusing to
cover a single-tablet drug regimen or extended release product that
is customarily prescribed and is just as effective as a multi-tablet
regimen, absent an appropriate reason for such refusal; and (3)
placing most or all drugs that treat a specific condition on the
highest cost tiers; 81 FR 12244.
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First, we propose revisions to Sec. 156.125.The proposed revisions
are intended to ensure that benefit designs, and particularly benefit
limitations and plan coverage requirements are based on clinical
evidence. Specifically, we propose that a nondiscriminatory benefit
design that provides EHB is one that is clinically based, that
incorporates evidence-based guidelines into coverage and programmatic
decisions and relies on current and relevant peer-reviewed medical
journal article(s), practice guidelines, recommendations from reputable
governing bodies, or similar sources. Uniformity of applying this
policy will ensure that enrollees are able to access covered benefits
fairly, regardless of the coverage or issuer they choose. Although this
proposal specifically applies to issuers that are required to provide
EHB, we expect that states and other entities will also find this
standard illustrative and helpful when, for example, conducting form
review, issuing guidance, and drafting bills for mandated benefits.
Furthermore, because providing a nondiscriminatory benefit design is a
prerequisite to issuers fulfilling EHB requirements, we would expect
that issuer questions and concerns regarding whether a particular
benefit design may be discriminatory would be addressed the same way as
other EHB issues--by issuers working primarily and cooperatively with
states, where applicable. While states are generally the primary
enforcers of EHB requirements, CMS will be available to assist states
with their enforcement efforts by providing relevant technical
assistance, available data, research, or other information. CMS will
continue to monitor issuer compliance with EHB nondiscrimination
requirements and states' oversight and enforcement activities to
discern whether additional CMS assistance, policy changes, or
rulemaking is necessary.
Under this proposal, unscientific \299\ evidence, disreputable
sources, and other bases or justifications that lack the support of
relevant, clinically based evidence would be an unacceptable basis upon
which to dispute a claim that an issuer's benefit design is
discriminatory. Examples of peer-reviewed medical journals that we
would generally consider reputable for purposes of disputing a
discriminatory benefit design claim include the Journal of the American
Medical Association (JAMA), published by the American Medical
Association; Anesthesia, published by the Association of Anesthetists;
Pediatrics, published by the American Academy of Pediatrics; Physical
Therapy and Rehabilitation Journal, published by the American Physical
Therapy Association; the New England Journal of Medicine (NEJM),
published by the Massachusetts Medical Society; and the American
Journal of Psychiatry, published by the American Psychiatric
Association. We do not propose limiting the scope of acceptable peer-
reviewed journal articles to those authored by persons who have earned
the degree Doctor of Medicine (or M.D.). Rather, we would consider
sufficient peer-reviewed articles authored by other relevant, licensed
health professionals, including, for example, doctors of osteopathy,
chiropractors, optometrists, nurses, occupational therapists,
pharmacists, and dentists.
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\299\ See Merriam-Webster.com Dictionary, s.v. ``unscientific,''
accessed November 5, 2021, https://www.merriam-webster.com/dictionary/unscientific (defining `unscientific' as ``not based on
or exhibiting scientific knowledge or scientific methodology: Not in
accord with the principles and methods of science'').
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We would not consider to be acceptable articles that are not peer-
reviewed or that are written primarily for a lay audience. For example,
we would not find relevant or consider a WebMD article or blog
acceptable, in and of itself, even where it cites and provides links to
supporting peer-reviewed journal materials. We would also not consider
sufficient a peer-reviewed journal article that has not been accepted
for publication in a reputable medical publication. For example, Health
Affairs would not provide sufficient and reliable support for this
purpose because, although it is peer-reviewed, it is not a medical
journal.
We also believe current evidence-based practice guidelines,
sometimes called clinical guidelines, and recommendations from
reputable governing bodies that are applicable to be a credible source.
For example, we believe that practice guidelines from U.S. government
bodies and government-created bodies, such as the HHS Agency for
Healthcare Research and Quality (AHRQ) and the U.S. Preventive Services
Task Force to be sufficient. Similarly, practice guidelines by health
professional associations such as the American Academy of Family
Physicians, American Academy of Pediatrics, American Society for
Reproductive Medicine, and American Occupational Therapy Association
would be relevant and credible. We also believe that any applicable
source representing current thinking and subject to the previously
discussed criteria would be relevant, since medicine is a constantly
evolving field.
We seek comment on the types of clinically based justifications and
level of clinical evidence that should be acceptable. Specifically, we
seek comment on whether we should further define the types of
acceptable clinical evidence.
Second, we are providing examples that illustrate presumptively
discriminatory practices that HHS believes amount to prohibited
discrimination. Individuals enrolled in health plans that have
discriminatory benefit designs have been negatively impacted by the
inherent design of such health plans. We are concerned that individuals
with significant health needs have been discouraged from enrolling in
such health insurance coverage altogether. Individuals may experience
substantial improvements in health insurance coverage if the EHB
nondiscrimination policy is refined.
In addition, we explain the rationale of why an example benefit
design is presumptively discriminatory under Sec. 156.125. HHS
identified these examples as presumptively discriminatory practices
based on clinical evidence related to each circumstance. We believe
providing examples of presumptively discriminatory benefit designs will
clarify EHB nondiscrimination policy and lead to greater protections
for individuals seeking medically necessary treatment.
These presumptively discriminatory practice examples may point to a
state's
[[Page 665]]
benchmark plan, state law, or an issuer's application of a state's
benchmark plan or law as being the source of the discriminatory benefit
design. A benefit design that is discriminatory and inconsistent with
Sec. 156.125 must be cured regardless of how it originated. Thus, for
example, if a state EHB-benchmark plan has a discriminatory benefit
design, that state may issue guidance to issuers in the state
explaining that to be compliant plans providing benefits that are
substantially equal to the EHB-benchmark plan must not replicate this
design. Similarly, if a state-mandated benefit has a discriminatory
benefit design, the state may attempt to remedy this through revising
the mandate or issuing guidance. Regardless, plans required to provide
EHB would need to alter the benefit design or justify their approach
with clinical evidence when designing plans that meet EHB standards. We
seek comment on whether there are any unforeseen barriers in the
ability to remedy inconsistencies with this refined EHB
nondiscrimination policy.
In ensuring that benefit designs are not discriminatory, issuers
should also consider the method that EHB are delivered and not
inadvertently discriminate based on the service delivery model.
Accessibility to EHB delivered virtually has significantly increased
during the COVID-19 PHE as enrollees had limited options for in-person
health care visits. We note that some issuers have designed health
plans that deliver services virtually with no copay compared to in-
person health care services with a copay. This type of health plan
design could inadvertently incentivize enrollees to access EHB in a
certain delivery method. Although this approach may not be a
discriminatory practice pursuant to Sec. 156.125, such a health plan
design could influence whether an enrollee seeks medically-necessary
in-person care due to the variation in the amount of copayment,
potentially leading to adverse health outcomes. We intend to monitor
the issue and remind issuers that while we encourage expanded use of
EHB virtually, it should be done in a nondiscriminatory manner.
The following is a non-exhaustive list of examples of presumptively
discriminatory benefit designs that address some of the issues that we
have seen most frequently.
Examples: Discrimination Based on Age
1. Limitation on Hearing Aid Coverage Based on Age
a. Background: The National Institute on Deafness and Other
Communication Disorders (NIDCD) defines a hearing aid as a small
electronic device that you wear in or behind the ear. It makes some
sounds louder so that a person with hearing loss can listen,
communicate, and participate more fully in daily activities.\300\ The
FDA defines a hearing aid as ``any wearable instrument or device
designed for, offered for the purpose of, or represented as aiding
persons with or compensating for, impaired hearing.'' \301\
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\300\ National Institute on Deafness and Other Communication
Disorders FAQ on Hearing Aids: https://www.nidcd.nih.gov/health/hearing-aids#hearingaid_01.
\301\ 21 CFR 801.420.
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b. Circumstance: We note that some states have included age limits
in their benefit mandates that require coverage for hearing aids by
specifying in the mandate that such coverage applies only to enrollees
in a certain age group. For example, a state has required hearing aid
coverage for enrollees only up to age 21 with certain cost-sharing
conditions.
c. Rationale: Individuals can experience hearing loss at any stage
of life, and therefore the limitation in coverage would impact an
individual in a different age group who has impaired hearing. Neither
the FDA definition of hearing aid nor NIDCD specifies an age when
individuals need hearing aids. However, the definitions explain that a
hearing aid is for ``a person with hearing loss'' and as ``aiding
persons with or compensating for, impaired hearing.'' Access to hearing
aids can positively affect an individual's communication abilities,
quality of life, social participation, and health.\302\
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\302\ National Academies of Sciences, Engineering, and Medicine.
2016. Hearing Health Care for Adults: Priorities for Improving
Access and Affordability. Washington, DC: The National Academies
Press. https://doi.org/10.17226/23446.
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d. Conclusion: Age limits, when applied to services that have been
found clinically indicated for all ages, are presumed to be
discriminatory under Sec. 156.125. Therefore, limiting coverage of
hearing aids that are medically necessary to enrollees based on age
presumptively conflicts with the prohibition under Sec. 156.125
against discriminatory health plan design. For example, it would be
arbitrary and discriminatory to limit a hearing aid to a subset of
individuals such as enrollees who are 6 years of age and younger since
there may be some older enrollees for whom a hearing aid is medically
necessary.\303\
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\303\ In the 2016 Payment Notice (which finalized as proposed),
we cautioned ``both issuers and States that age limits are
discriminatory when applied to services that have been found
clinically effective at all ages. For example, it would be arbitrary
to limit a hearing aid to enrollees who are 6 years of age and
younger since there may be some older enrollees for whom a hearing
aid is medically necessary.''
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2. Autism Spectrum Disorder (ASD) Coverage Limitations Based on Age
a. Background: According to the American Psychiatric Association,
``[p]eople with ASD may have communication deficits, such as responding
inappropriately in conversations, misreading nonverbal interactions, or
having difficulty building friendships appropriate to their age. In
addition, people with ASD may be overly dependent on routines, highly
sensitive to changes in their environment, or intensely focused on
inappropriate items.'' \304\
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\304\ https://www.psychiatry.org/File%20Library/Psychiatrists/Practice/DSM/APA_DSM-5-Autism-Spectrum-Disorder.pdf.
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b. Circumstance: We note that some states have mandated coverage
for the diagnosis and treatment for ASD up to a certain age. For
example, a state has required coverage for enrollees up to age 18 with
certain cost-sharing conditions. Similarly, some states' benchmark
plans that cover applied behavior analysis (ABA therapy) include age
limits.
c. Rationale: The CDC recognizes the American Psychiatric
Association's fifth edition of the Diagnostic and Statistical Manual of
Mental Disorders (DSM-5) as standardized criteria to help diagnose
ASD.\305\ Under the DSM-5 criteria, individuals with ASD must show
symptoms from early childhood, but may not be fully recognized until
later in life.\306\ We note that screening for ASD is usually done at a
young age although an individual may not be diagnosed until later in
life. The CDC estimates that 2.21 percent of adults in the U.S. have
ASD.\307\
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\305\ https://www.cdc.gov/ncbddd/autism/hcp-dsm.html.
\306\ American Psychiatric Association. Diagnostic and
statistical manual of mental disorders. 5th ed. Arlington, VA:
American Psychiatric Association; 2013.
\307\ https://www.cdc.gov/ncbddd/autism/features/adults-living-with-autism-spectrum-disorder.html.
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d. Conclusion: Limiting coverage of the diagnosis and treatment of
ASD in a plan benefit design on the basis of the individual's age is
presumed to be discriminatory under Sec. 156.125. Limiting coverage
that is medically necessary in a subset of individuals presumptively
conflicts with the prohibition under Sec. 156.125 against
discriminatory benefit design.
3. Age Limits for Infertility Treatment Coverage When Treatment Is
Clinically Effective for the Age Group
a. Background: The National Center for Health Statistics reported
that 8.8 percent of couples in the U.S. have
[[Page 666]]
experienced infertility issues while 9.5 percent have received
infertility services (for example, medical assistance, counseling,
testing for the woman and man, ovulation drugs, fallopian tube surgery,
artificial insemination, assisted reproductive technology, and
miscarriage preventive services).\308\
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\308\ https://www.cdc.gov/nchs/nsfg/key_statistics/i_2015-2017.htm#infertility.
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b. Circumstance: We note that some states have defined
``infertility'' in state law, which impacts insurance companies,
hospitals, medical service corporations, and health care centers
providing coverage for medically necessary expenses of the diagnosis
and treatment of infertility. For example, a state restricted coverage
for treatment of infertility to individuals who are ``presumably
healthy,'' thus excluding from coverage of treatment for infertility
those who are not presumably healthy.
c. Rationale: We note that an individual's age is an important
factor for reproductive health and development. Fertility, especially
in women, declines with age, which makes natural conception more
unlikely as women get older.\309\ However, we also note that the mean
age for individuals experiencing their first childbirth has increased
in recent years.\310\ We also understand that not all individuals would
be eligible for infertility treatment if they are not at the stage of
development for reproduction or have certain medical conditions.
Younger individuals, for example, who are not at the stage of
reproductive development would reasonably not require treatment for
infertility. Older adults as well would not need treatment for
infertility, for example women who have reached post-menopause.
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\309\ https://www.acog.org/womens-health/faqs/having-a-baby-after-age-35-how-aging-affects-fertility-and-pregnancy.
\310\ Mean Age of Mothers is on the Rise: United States, 2000-
2014, NCHS Data Brief No. 232, January 2016, https://www.cdc.gov/nchs/products/databriefs/db232.htm.
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d. Conclusion: Age limits are presumptively discriminatory when
applied to services that have been found clinically effective in
certain age groups under Sec. 156.125. Limiting coverage of the
treatment of infertility in a plan benefit design based on age
presumptively conflicts with the prohibition under Sec. 156.125
against discriminatory benefit design unless clinical evidence
acceptable under the proposed refinements to Sec. 156.125 demonstrates
that such a limitation is justifiable considering an individual's
reproductive health and development. We would expect an issuer to be
able to rebut a presumption that the plan's age limit on coverage for
treatment of infertility is discriminatory by demonstrating clinical
evidence that infertility treatments have low efficacy for the excluded
age groups and/or are not clinically indicated for the excluded age
groups.
Examples: Discrimination Based on Health Conditions
4. Limitation on Foot Care Coverage Based on Diagnosis (Whether
Diabetes or Another Underlying Medical Condition)
a. Background: Routine foot care includes cutting or removing corns
and calluses; trimming, cutting, or clipping or debriding of nails; and
hygienic or other preventive maintenance care, such as using skin
creams, cleaning and soaking the feet.\311\ Although basic foot care is
part of an individual's personal self-care, a health care provider in
certain situations may perform routine foot care for a patient to the
degree that is medically necessary to prevent perpetuation of chronic
conditions.
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\311\ Medicare Benefit Policy Manual. Routine Foot Care. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.
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b. Circumstance: We note that some issuers have restricted coverage
for routine foot care to individuals diagnosed with diabetes. For
example, several issuers have limited coverage for routine foot care to
diabetes care only.
c. Rationale: The American Diabetes Association estimates that over
10 percent of the American population has diabetes, which costs $237
billon for direct medical costs.\312\ The annual cost of diabetic foot
ulcer treatment, for example, is significantly greater than non-
diabetic foot ulcer treatment, estimated at $1.38 billion versus $0.13
billion.\313\ Although diabetes is a vast medical expenditure in the
United States, individuals may need routine foot care to treat other
conditions associated with metabolic, neurologic, or peripheral
vascular disease.\314\
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\312\ https://www.diabetes.org/resources/statistics/statistics-about-diabetes.
\313\ Hicks CW, Selvarajah S, et al. Burden of infected diabetic
foot ulcers on hospital admissions and costs. Ann Vasc Surg
2016;33:149-58. 10.1016/j.avsg.2015.11.025.
\314\ https://wayback.archive-it.org/2744/20191012061156/https:/www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/SE1113.pdf.
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d. Conclusion: Limiting coverage of routine foot care in a health
plan based on an individual's diagnosis, whether for diabetes or
another underlying medical condition, is presumed to be discriminatory
under Sec. 156.125. Limiting coverage of routine foot care that is
medically necessary for a subset of individuals with other health
conditions presumptively conflicts with the prohibition under Sec.
156.125 against discriminatory benefit designs.
Examples: Discrimination Based on Sociodemographic Factors
5. Coverage of EHB for Gender-Affirming Care
a. Background: We refer to other nondiscrimination proposed
provisions in Sec. 156.200(e) of this rulemaking related to protecting
individuals from discrimination based on sexual orientation and gender
identity. If the proposed provisions in that section are finalized, the
below example will be illustrative of a presumptively discriminatory
benefit design that denies coverage of medically necessary gender-
affirming care on the prohibited basis of gender identity. This example
of presumptive discrimination also aligns with Executive Order 13988,
which stated the Administration's policy on preventing and combating
discrimination on the basis of gender identity and sexual
orientation.\315\
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\315\ American Psychiatric Association. Diagnostic and
statistical manual of mental disorders. 5th ed. Arlington, VA:
American Psychiatric Association; 2013; Executive Order 13988 on
Preventing and Combating Discrimination on the Basis of Gender
Identity or Sexual Orientation, January 20, 2021, see 86 FR 7023.
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b. Circumstance: The American Psychiatric Association describes
``gender dysphoria'' in transgender individuals as an experience of
psychological distress that results from an incongruence between one's
sex assigned at birth and one's gender identity.\316\ HeathCare.gov
notes that many health plans have unclear terms of coverage for
transgender individuals.\317\ Several states' EHB-benchmark plans
contain either no language addressing coverage for gender dysphoria or
limits coverage for specific gender-affirming services. Some states
have updated their benchmark plan to add specific gender-affirming care
benefits while other states prohibit discrimination based on sexual
orientation and gender identity. We also note that issuers have
published policies \318\ related to specific coverage of gender
affirming-care.
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\316\ https://www.psychiatry.org/patients-families/gender-dysphoria/what-is-gender-dysphoria.
\317\ HealthCare.gov states that ``many health plans are still
using exclusions such as `services related to sex change' or `sex
reassignment surgery' to deny coverage to transgender people for
certain health care services. Coverage varies by state.'' ``These
transgender health insurance exclusions may be unlawful sex
discrimination.'' https://www.HealthCare.gov/transgender-health-care/.
\318\ See, for example, Aetna Gender Affirming Surgery https://www.aetna.com/cpb/medical/data/600_699/0615.html.
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[[Page 667]]
c. Rationale: As discussed in more detail in the preamble to Sec.
147.104(e), transgender individuals face health and health care
disparities, and are at higher risk for many concomitant
conditions.\319\ Clinical evidence supports medically necessary gender
affirming care and demonstrates that such coverage can significantly
improve the health and well-being of individuals accessing medically
necessary care. For example, for individuals diagnosed with gender
dysphoria, the American Medical Association's Council on Science and
Public Health supports the use of hormone therapy and supports health
care providers that prescribe hormone therapy based on scientific
evidence or sound medical opinion.\320\ In addition, other professional
societies have published criteria for guidelines in treating gender
dysphoria and gender-affirming care for transgender people.\321\
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\319\ See, for example, Lesbian, Gay, Bisexual, and Transgender
Health, Healthy People 2020, https://www.healthypeople.gov/2020/
topics-objectives/topic/lesbian-gay-bisexual-and-transgender-
health#:~:text=Research%20suggests%20that%20LGBT%20individuals,%2C2%2
C%203%20and%20suicide; Hafeez, Hudaisa et al. ``Healthcare
Disparities Among Lesbian, Gay, Bisexual, and Transgender Youth: A
Literature Review.'' Cureus vol. 9,4 e1184. 20 Apr. 2017,
doi:10.7759/cureus.1184 (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5478215/); Fredriksen-Goldsen KI, Kim H-J, Barkan SE, Muraco A
and Hoy-Ellis CP (2013) Health disparities among lesbian, gay, and
bisexual older adults: Results from a population-based study.
American Journal of Public Health 103, 1802-1809; Billy A. Caceres
et al. ``A Systematic Review of Cardiovascular Disease in Sexual
Minorities'', American Journal of Public Health 107, no. 4 (April 1,
2017): pp. e13-e21.
\320\ Report of the Council on Science and Public Health, AMA.
Hormone Therapies: Off-Label Uses and unapproved Formulations
(Resolution 512-A-15). https://www.ama-assn.org/sites/ama-assn.org/files/corp/media-browser/2016-interim-csaph-report-4.pdf.
\321\ World Professional Assn for Transgender Health, Standards
of Care Version 7 (2018), available at https://www.wpath.org/publications/. J Clin Endocrinol Metab, November 2017, 102(11):3869-
3903 https://academic.oup.com/jcem.
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d. Conclusion: Pursuant to Sec. Sec. 156.125 and 156.200(e), as we
have proposed to amend these provisions, benefit designs that restrict
coverage of EHB due to gender identity are presumptively
discriminatory. A health plan design, for example, is presumed to be
discriminatory Sec. Sec. 156.125 and 156.200(e) if it limits coverage
of an EHB based on gender identity in treating gender dysphoria when
clinical evidence demonstrates that such coverage is medically
necessary to provide gender-affirming care. For example, excluding
coverage of medically necessary hormone therapy for treatment of gender
dysphoria where hormone therapy is otherwise a covered EHB is
presumptively discriminatory.
6. Access to Prescription Drugs for Chronic Health Conditions: Adverse
Tiering
Adverse tiering of prescription drugs presents unique issues
different from presumptively discriminatory benefit designs in other
categories of EHB. We acknowledge that cost is often an important
factor in how plans and issuers, and their pharmacy benefit managers
(PBMs) where applicable, tier their drugs and note that plans and
issuers are permitted to use reasonable medical management practices
and consider cost in structuring plan designs and cost sharing.
However, we clarify that relying on cost alone is an insufficient basis
to defend an otherwise discriminatory benefit design. An issuer
providing EHB must not discriminate in its prescription drug tiering
structure by discouraging enrollment of individuals with significant
health needs. As proposed in Sec. 156.125(a), in order to not
discriminate, the issuer's EHB prescription drug benefit design must be
clinically based. Factors that might be relevant to successfully
demonstrating to CMS that the prescription drug tiering is not
discriminatory would be demonstrating that neutral principles were used
in assigning tiers to drugs and that those principles were consistently
applied across types of drugs, particularly as related to other drugs
in the same class (for example, demonstrating that the issuer or PBM
weighed both cost and clinical guidelines in setting tiers).
a. Background: QHP issuers are allowed to structure and offer
tiered prescription drug formularies. As a result, QHPs will have
different tier structures depending on decisions, including on the
basis of cost, that issuers make about their formulary structures.
However, there is concern that formulary tiers may also be structured
to discourage enrollment by consumers with certain chronic conditions.
One approach to this, called adverse tiering, occurs when plans
structure the formulary by assigning all or the majority of drugs for
certain medical conditions to a high-cost prescription drug tier.\322\
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\322\ Jacobs, Douglas B. and Sommers, Benjamin D. ``Using Drugs
to Discriminate--Adverse Selection in the Insurance Marketplace.''
New England Journal of Medicine. 372:399-402. 29 Jan 2015. <https://www.nejm.org/doi/citedby/10.1056/NEJMp1411376#t=citedby>.
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b. Circumstance: Individuals with certain chronic health
conditions, for example, have reported that the majority of their
prescription drugs have been designated as specialty drugs and placed
in the highest cost tier. Individuals have also seen most or all
prescription drugs in the same therapeutic class, used to treat their
chronic health condition, placed on the highest cost tiers.
c. Rationale: More than half of U.S. adults are diagnosed with a
chronic condition. In 2018, prevalence of multiple chronic conditions
was higher among women, non-Hispanic white adults, older adults, adults
aged 18-64 enrolled in Medicaid, adults dually eligible for Medicare
and Medicaid, and adults in rural areas.\323\ Adults with certain high-
cost chronic conditions require long-term treatment to manage their
chronic health conditions. Health benefit designs with adverse tiering
may discriminate based on an individual's present or predicted
disability or other health conditions in a manner prohibited by Sec.
156.125(a).
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\323\ Boersma P, Black LI, Ward BW. Prevalence of Multiple
Chronic Conditions Among U.S. Adults, 2018. Prev Chronic Dis
2020;17:200130. DOI: https://dx.doi.org/10.5888/pcd17.200130.
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d. Conclusion: The 2016 Payment Notice provides that if an issuer
places most or all drugs that treat a specific condition on the highest
cost tiers, that such plan designs possibly discriminate against,
individuals who have those chronic high cost conditions under Sec.
156.125. We are clarifying that such instances of adverse tiering are
presumptively discriminatory and that issuers and PBMs assigning tiers
to drugs should weigh cost of drugs on their formulary with clinical
guidelines for any such drugs used to treat high-cost chronic health
conditions to avoid tiering such drugs in a manner that would
discriminate based on an individual's present or predicted disability
or other health conditions in a manner prohibited by Sec. 156.125(a).
In addition, we indicated in the 2014 Letter to Issuers that we
will notify an issuer when we see an indication of a reduction in the
generosity of a benefit in some manner for subsets of individuals that
is not based on clinically indicated, reasonable medical management
practices.\324\ Issuers should expect to cover and provide sufficient
access to treatment recommendations that have the highest degree of
clinical consensus based on available data, such as professional
clinical practice guidelines. Placing all drugs for a high cost chronic
condition on the highest formulary tier is a presumed discriminatory
benefit design, even when those drugs are costly. Plans and issuers
that tier specialty drugs higher
[[Page 668]]
for certain chronic conditions should expect to demonstrate that
neutral principles were used in assigning tiers to such drugs and that
those principles were consistently applied across types of drugs (for
example, that the issuer weighed both cost and clinical guidelines in
setting tiers).
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\324\ Letter to Issuers on Federally-facilitated and State
Partnership Exchanges, April 5, 2013, page 15 and 2015 Letter to
Issuers in the Federally facilitated Marketplaces, March 14, 2014,
page 29.
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For example, a generic drug requiring no special handling that is
inexpensive to obtain might be rightly placed on a generic tier or the
lowest tier whereas a specialty drug requiring special handling and
counseling, and that is also very costly, might be rightly placed on
specialty tier that has the highest cost sharing. However, a generic
drug or common brand drug that does not require special handling,
counseling, or medication management, and is not expensive, should not
be placed on a specialty tier just because it is used to treat a
condition that is a high-cost chronic condition. Furthermore, issuers
and PBMs should pay close attention to any instances where all drugs to
treat chronic conditions are placed on the highest-cost tiers.
In relation to the proposed refinement of the nondiscrimination
standard under Sec. 156.125, we propose that the policy become
effective 60 days after publication of the final rule in the Federal
Register. We seek comment on this proposed effective date.
In addition, we recognize that other nondiscrimination and civil
rights law may apply. These laws are distinct from the
nondiscrimination requirements in CMS regulations, and compliance with
Sec. 156.125 is not determinative of compliance with any other
applicable requirements, nor is additional enforcement precluded.
Section 156.125 does not apply to the Medicaid and CHIP programs, but a
parallel provision applies to EHB furnished by Medicaid Alternative
Benefit Plans.\325\ We intend to provide additional examples and
illustrative fact patterns of benefit designs that are discriminatory
pursuant to Sec. 156.125 in the future, as warranted. We seek comment
on the nondiscrimination examples in this proposal and whether the
proposed effective date is sufficient to implement the refined policy.
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\325\ 42 CFR 440.347(e).
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7. Publication of the 2023 Premium Adjustment Percentage, Maximum
Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on
Cost Sharing and Required Contribution Percentage in Guidance (Sec.
156.130)
As established in part 2 of the 2022 Payment Notice, HHS will
publish the premium adjustment percentage, the required contribution
percentage, and maximum annual limitations on cost sharing and reduced
maximum annual limitation on cost sharing, in guidance annually
starting with the 2023 benefit year. We note that these parameters are
not included in this rulemaking, as HHS does not propose to change the
methodology for these parameters for the 2023 benefit year and
therefore, HHS is required to publish these parameters in guidance no
later than January 2022.
8. Levels of Coverage (Actuarial Value) (Sec. Sec. 156.140, 156.200,
156.400)
HHS proposes to change the de minimis ranges at Sec. 156.140(c)
beginning in PY 2023 to +2/-2 percentage points for all individual and
small group market plans subject to the AV requirements under the EHB
package, other than for expanded bronze plans,\326\ for which HHS
proposes a de minimis range of +5/-2. Under Sec. 156.200, HHS
proposes, as a condition of QHP certification, to limit the de minimis
range to +2/0 percentage points for individual market silver QHPs; HHS
also proposes under Sec. 156.400 to specify a de minimis range of +1/0
percentage points for income-based silver CSR plan variations.
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\326\ Expanded bronze plans are bronze plans currently
referenced in Sec. 156.140(c) that cover and pay for at least one
major service, other than preventive services, before the deductible
or meet the requirements to be a high deductible health plan within
the meaning of section 223(c)(2) of the Code.
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Section 2707(a) of the PHS Act and section 1302 of the ACA direct
issuers of non-grandfathered individual and small group health
insurance plans (including QHPs) to ensure that these plans adhere to
the levels of coverage specified in section 1302(d)(1) of the ACA. A
plan's level of coverage, or actuarial value (AV), is determined based
on its coverage of the EHB for a standard population. Section
1302(d)(1) of the ACA requires a bronze plan to have an AV of 60
percent, a silver plan to have an AV of 70 percent, a gold plan to have
an AV of 80 percent, and a platinum plan to have an AV of 90 percent.
Section 1302(d)(2) of the ACA directs the Secretary of HHS to issue
regulations on the calculation of AV and its application to the levels
of coverage. Section 1302(d)(3) of the ACA authorizes the Secretary to
develop guidelines to provide for a de minimis variation in the
actuarial valuations used in determining the level of coverage of a
plan to account for differences in actuarial estimates.
In the EHB Rule at Sec. 156.140(c), we established that the
allowable de minimis variation in the AV of a health plan that does not
result in a material difference in the true dollar value of the health
plan was +2/-2 percentage points. In the 2018 Payment Notice, we
revised Sec. 156.140(c) to permit a de minimis variation of +5/-2
percentage points for bronze plans that either cover and pay for at
least one major service other than preventive services before the
deductible or meet the requirements to be a high deductible health
plans (HDHP) within the meaning of section 223(c)(2) of the Code. In
the 2017 Market Stabilization final rule, effective for PY 2018, we
expanded the de minimis range for standard bronze, silver, gold, and
platinum plans to +2/-4.\327\ In that final rule, we stated that we
believed that flexibility was needed for the AV de minimis range for
metal levels to help issuers design new plans for future PYs, thereby
promoting competition in the market.\328\ In addition, we noted that
changing the de minimis range would allow more plans to keep their cost
sharing the same as well as provide additional flexibility for issuers
to make adjustments to their plans within the same metal level. We
stated our view that a de minimis range of +2/-4 percentage points
provided the flexibility necessary for issuers to design new plans
while ensuring comparability of plans within each metal level.
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\327\ We did not in that rule modify the de minimis range for
the income-based silver CSR plan variations (the plans with an AV of
73, 87 and 94 percent) under Sec. Sec. 156.400 and 156.420. The de
minimis variation for an income-based silver CSR plan variation is a
single percentage point. In the Actuarial Value and Cost-Sharing
Reductions Bulletin (2012 Bulletin) issued on February 24, 2012, we
explained why we did not intend to require issuers to offer a silver
CSR plan variation with an AV of 70 percent; to align with this
change, we also modified the de minimis range for expanded bronze
plans from +5/-2 to +5/-4.
\328\ 82 FR at 18369.
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Since we finalized these de minimis ranges in the 2018 Payment
Notice and the 2017 Market Stabilization final rule, we have observed
an increasing percentage of bronze plans offered on HealthCare.gov with
AVs in the upper end of the current de minimis range. In PY 2018, 8.45
percent of all bronze plans offered on HealthCare.gov had an AV between
64 and 65 percent. In PYs 2019 and 2020, this number grew to 14.29
percent and 24.44 percent, respectively. For PY 2021, 67.55 percent of
bronze plans offered on HealthCare.gov had an AV between 64 and 65
percent. As the cost of health care services continues to increase, we
[[Page 669]]
expect more bronze plans to have an AV of at least 64 percent in future
PYs.
[GRAPHIC] [TIFF OMITTED] TP05JA22.024
During PYs 2018 through 2021, as the percentage of bronze plans
within the upper limit of the +5/-4 percentage point range increases,
the percentage of silver plans offered on HealthCare.gov within the
lower end of the current +2/-4 percentage point range has remained
consistent, with less than a third of silver plans having an AV between
66 and 68 percent.
[GRAPHIC] [TIFF OMITTED] TP05JA22.025
Despite the consistency of silver plan distribution by AV
percentage, the number of enrollees in silver plans on HealthCare.gov
within the lower end of the current +2/-4 percentage point range has
decreased each year since 2018, while the number of enrollees in bronze
plans within the upper end of the current +5/-4 percentage point range
has increased each year since 2018.
[GRAPHIC] [TIFF OMITTED] TP05JA22.026
As the availability of and enrollment in bronze plans within the
upper end of the current de minimis range increases and the enrollment
in silver plans within the lower end of the current de minimis range
decreases, we believe that it is increasingly important for consumers
to be able to distinguish the levels of coverage between bronze plans
and silver plans and be assured that the level of coverage of their
plan corresponds to the relevant metal tier. We are not confident that
consumers can reliably distinguish plans that have similar AV
percentages, but significantly different cost sharing. Despite their
similar AVs, there is generally a 10 percentage point difference in
median coinsurance per EHB between expanded bronze and base silver
plans offered on HealthCare.gov. The difference between copayment
amounts for expanded bronze plan and base silver plan is also apparent.
[GRAPHIC] [TIFF OMITTED] TP05JA22.027
[[Page 670]]
Thus, we are no longer of the view that a silver de minimis range
of +2/-4 percentage points ensures the meaningful comparison of plans
between the silver and bronze levels of coverage. However, we continue
to recognize the importance of permitting issuers to offer expanded
bronze plans because the rationale for expanding the upper limit of the
de minimis range for these plans to +5 still applies to the current
market: Issuers continue to require greater flexibility for bronze plan
design to assist with innovation, premium impact, and future impacts to
the AV Calculator methodology, to ensure that bronze plans can continue
to be more generous than catastrophic plans, and to ensure that HDHPs
can be offered at the bronze level. At the same time, the 2017 Market
Stabilization final rule also noted the narrow difference in bronze and
silver QHPs and therefore, to improve a consumer's ability to
meaningfully compare the bronze and silver levels of coverage, pursuant
to our authority under sections 1302(d)(3) and 1321(a)(1)(A) and (D) of
the ACA, and sections 2707 and 2792 of the PHS Act, we propose changing
the de minimis range for standard silver plans.
Additionally, as shown in Tables 14 and 15, we have observed a
shift in enrollment for gold plans in 2021 and bronze plans since 2019
within the +2/-4 de minimis towards the center of the de minimis (+2/-
2).
[GRAPHIC] [TIFF OMITTED] TP05JA22.028
[GRAPHIC] [TIFF OMITTED] TP05JA22.029
Because of this shift, and for consistency across the metal levels,
which would help reduce potential consumer confusion, we believe it is
appropriate to propose, starting with PYs beginning in 2023, to change
the de minimis ranges for the standard bronze, gold, and platinum
levels of coverage from +2/-4 percentage points to +/-2 percentage
points. Likewise, we have observed a similar shift in enrollment for
expanded bronze plans that currently utilize a +5/-4 de minimis range.
Because of this shift, and to align with the proposal above, we also
propose, starting with PYs beginning in 2023, to change the de minimis
range for expanded bronze plans from +5/-4 to +5/-2.
Further, states generally remain the primary enforcers of the
requirement to meet AV requirements, including, to the extent required
by Sec. 156.135, the use of the federal AV Calculator or an AV
Calculator that utilizes state-specific data under Sec. 156.135(e). In
the 2017 Market Stabilization rule, we stated that states are the
primary enforcers of AV requirements and can apply stricter AV
standards that are consistent with federal law.\329\ We also stated
that a state cannot require issuers to design plans that apply an AV
range that is not consistent with our implementation of section
1302(d)(1) and (d)(3) of the ACA (which defines the metal levels and de
minimis ranges). We reiterate those statements here. Under this
proposal, a state cannot apply an AV range that exceeds +2/-2
percentage points, except for under the proposed expanded bronze range
originally provided for in Sec. 156.140(c).
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\329\ 82 FR at 18369.
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In addition to the proposal applicable to non-grandfathered
individual and small group market health insurance coverage market-
wide, we also propose to amend Sec. 156.200(b)(3) to state that,
beginning with year PY 2023, as a requirement for certification, the
allowable variation in AV for individual market silver QHPs would be +
2/0 percentage points. Through the authority granted to HHS in sections
1311(c) and 1321(a) of the ACA to establish minimum requirements for
QHP certification, we propose this narrower de minimis range for
individual market silver QHPs in order to maximize PTC and APTC for
subsidized enrollees. Narrowing the de minimis range of individual
market silver QHPs would influence the generosity of the SLCSP, the
benchmark plan used to determine an individual's PTC. A subsidized
enrollee who has a SLCSP that is currently below 70 percent AV would
see the generosity of their current SLCSP increase, likely accompanied
by a corresponding increase in premium, resulting in an increase in
PTC. As shown in Table 12, since 2018, enrollment in 66.00 to 69.99
percent AV silver plans has decreased and enrollment in 62 to 64.99
percent AV bronze plans has increased; enrollees in such bronze plans
now outnumber enrollees in such silver plans by more than 10 to 1. In
addition, after implementation of the ARP enhanced financial subsidies,
there are even fewer enrollees remaining in silver QHPs with AVs
between 66.00 and 69.99 percent offered through Exchanges that use the
Federal platform. Approximately 248,000 enrollees remain, of which
about 91,000 are unsubsidized. By comparison, enrollment for the
income-based silver CSR variations corresponding to the above silver
QHPs has increased to about 4.2 million. This proposal would reduce the
cost of insurance coverage for an increasing population of subsidized
enrollees. It would also mitigate the net burden of the additional cost
to a decreasing population of unsubsidized enrollees by incentivizing
healthier, subsidy-eligible enrollees to participate in the
Marketplaces.
Thus, we believe maximizing PTC for all subsidized enrollees
justifies a narrower de minimis range on
[[Page 671]]
individual market silver QHPs that have fewer enrollments each year. We
solicit comment on other cost implications the proposal might have.
Finally, we propose changing the de minimis variation for
individual market income-based silver CSR plan variations from +1/-1 to
+1/0 with a proposed revision to the definition of ``De minimis
variation for a silver plan variation'' at Sec. 156.400. Similar to
the +2/0 de minimis proposal for individual market silver QHPs, this
proposal would deliver further subsidization of premiums via increased
APTC and PTC for subsidized enrollees in the income-based silver CSR
plan variations and increase the generosity of these plans. While there
would be an expected increase to the premium for the CSR plan
variations as a result of the increased generosity, it would be
substantially offset by increases to the APTC and PTC. We do not
propose edits to the minimum AV differential in Sec. 156.420(f) for
silver QHPs and 73 percent income-based plan variations, where the AVs
must differ by at least 2 percentage points. We would note for issuers
that, similar to the current de minimis ranges, standard silver QHPs
with plan AVs between 71 and 72 percent would require the corresponding
73 percent income-based plan variation AV to be at least 2 percentage
points above the standard plan's AV.
We seek comment on this proposal.
9. QHP Issuer Participation Standards (Sec. 156.200)
We propose to amend 45 CFR 156.200(e) such that its
nondiscrimination protections would explicitly prohibit discrimination
based on sexual orientation and gender identity. HHS previously
codified such nondiscrimination protections at Sec. 156.200(e), but
amendments made in 2020 to Sec. 156.200(e) removed any reference to
sexual orientation and gender identity. If finalized, this proposal
would revert Sec. 156.200(e) to the pre-2020 nondiscrimination
protections.
Section 156.200(e) states that a QHP issuer must not, with respect
to its QHP, discriminate on the basis of race, color, national origin,
disability, age, or sex. Previously, in the March 27, 2012 Exchange
Standards final rule, we finalized Sec. 156.200(e) to also prohibit
discrimination based on sexual orientation and gender identity.\330\
However, in the 2020 final rule related to section 1557, HHS revised
certain CMS regulations, including Sec. 156.200(e), by removing sexual
orientation and gender identity in Sec. 156.200(e) as bases of
discrimination subject to the CMS regulations' nondiscrimination
protections.\331\
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\330\ 77 FR 18310 (March 27, 2012).
\331\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020
section 1557 final rule revised the following CMS regulations: 45
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
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CMS possesses statutory authority independent of section 1557 of
the ACA to prohibit discrimination by issuers of QHPs. Pursuant to
section 1311(c)(1)(A) of the ACA, QHP issuers are required to comply
with applicable state laws and regulations regarding marketing by
health insurance issuers and not employ marketing practices or benefit
designs that will have the effect of discouraging the enrollment of
individuals with significant health needs. CMS is authorized to
interpret and implement this requirement, and to set additional
requirements for QHPs under its authority to establish requirements
with respect to the offering of QHPs through the Exchanges in section
1321(a)(1)(B) of the ACA.\332\ Pursuant to this authority to set QHP
standards in section 1321(a)(1)(B) of the ACA, HHS finalized in the
2012 Exchange Standards final rule requirements at Sec. 156.200(e)
intended to protect enrollees and potential enrollees from
discriminatory practices, including on the basis of sexual orientation
and gender identity. CMS proposes to exercise that same authority here
to amend Sec. 156.200(e) to again prohibit QHPs from discriminating
based on sexual orientation and gender identity. Section 1321(a)(1)(B)
of the ACA is the same authority CMS relies upon for implementation of
existing nondiscrimination protections at Sec. 156.200(e). Utilizing
this same authority to again prohibit discrimination based on sexual
orientation and gender identity at Sec. 156.200(e) would be consistent
with the authority CMS relies upon for the existing protections at
Sec. 156.200(e) that currently prohibit discrimination on the basis of
race, color, national origin, disability, age, or sex. We believe such
amendments are warranted in light of the existing trends in health care
discrimination and are necessary to better address barriers to health
equity for LGBTQI+ individuals.
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\332\ 85 FR 37218-37221 (June 19, 2020).
---------------------------------------------------------------------------
A more in-depth discussion of these developments and other factors
considered in proposing amendments to CMS nondiscrimination protections
is included earlier in the preamble to Sec. 147.104 under section
III.B.1.b. of this preamble. For brevity, we refer readers back to
Sec. 147.104 under section III.B.1.b. of the preamble, rather than
restating the issues here.
We seek comment on this proposal.
10. Standardized Options (Sec. 156.201)
Section 1311(c)(1) of the ACA directs the Secretary to establish
criteria for the certification of health plans as QHPs. Section
1321(a)(1)(B) of the ACA directs the Secretary to issue regulations
that set standards for meeting the requirements of title I of the ACA
with respect to, among other things, the offering of QHPs through such
Exchanges. HHS proposes to exercise these authorities to require
issuers of QHPs in FFEs and SBE-FPs, for PY 2023 and beyond, to offer
through the Exchange standardized QHP options at every product network
type, as described in the definition of ``product'' at Sec. 144.103,
metal level, and throughout every service area that they offer non-
standardized QHP options. For example, if an issuer offers a non-
standardized gold health maintenance organization (HMO) plan in a
particular service area, that issuer must also offer a standardized
gold HMO plan in that same service area. HHS does not propose to limit
the number of non-standardized QHP options that issuers of QHPs in FFEs
and SBE-FPs can offer through the Exchange in PY 2023. As discussed
later, HHS is considering whether for future years it would be
appropriate to limit the number of non-standardized QHP options that
issuers of QHPs in FFEs and SBE-FPs can offer through the Exchange.
Standardized options were first introduced in the 2017 Payment
Notice. In the first iteration of standardized options, HHS proposed
one set of standardized options designed to be similar to the most
popular QHPs in the 2015 individual market FFEs at the bronze, silver,
and gold metal levels. Issuers were not required to offer standardized
options. To facilitate plan shopping and to educate consumers about the
distinctive cost sharing features of standardized options, standardized
options were differentially displayed on HealthCare.gov per the
authority at Sec. 155.205(b)(1). Specifically, consumers had the
ability to filter plan options to view only standardized options and
received an accompanying message explaining how standardized options
differed from non-standardized options.
In the 2018 Payment Notice, HHS proposed three new sets of
standardized options. The original standardized options from the 2017
Payment Notice were updated to reflect changes in QHP enrollment data
in 2016, to include
[[Page 672]]
SBE-FP data, and to account for state cost sharing laws. Standardized
options were once more differentially displayed, but this time, they
were also labeled ``Simple Choice'' plans to make them more easily
distinguishable from non-standardized options. HHS also established
display requirements for approved web-brokers and QHP issuers using a
direct enrollment pathway to facilitate enrollment through an FFE or
SBE-FP--including both the Classic DE and EDE Pathways--at Sec. Sec.
155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively.
333 334 Per these requirements, these entities were required
to differentially display standardized options in accordance with the
requirements under Sec. 155.205(b)(1) in a manner consistent with how
standardized options were displayed on HealthCare.gov, unless HHS
approved a deviation.
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\333\ See 81 FR at 94117--94118, 94148.
\334\ See 45 CFR 155.220(l) and 155.221(i).
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Standardized options were then discontinued in the 2019 Payment
Notice, but the discontinuance was challenged in the United States
District Court for the District of Maryland. On March 4, 2021, the
court decided City of Columbus, et al. v. Cochran.\335\ The court
reviewed nine separate policies HHS had promulgated in the 2019 Payment
Notice, vacating four of them. The court specifically vacated the
portion of the 2019 Payment Notice that ceased HHS's practice of
designating some plans in the FFEs as ``standardized options,'' a
policy that the 2019 Payment Notice stated was seeking to maximize
innovation by issuers in designing and offering a wide range of plans
to consumers.\336\ As such, HHS announced its intent to engage in
rulemaking under which it would propose to resume standardized options
in time for PY 2023.\337\ More recently, President Biden's Executive
Order on Promoting Competition in the American Economy directed HHS to
implement standardized options in order to facilitate the plan
selection process for consumers on the Exchanges.\338\
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\335\ 523 F. Supp. 3d 731 (D. Md. 2021).
\336\ 83 FR 16974--16975.
\337\ In part 3 of the 2022 Payment Notice final rule, we
explained that we would not be able to fully implement those aspects
of the court's decision regarding standardized options in time for
issuers to design plans and for Exchanges to be prepared to certify
such plans as QHPs for PY 2022, and therefore intended to address
these issues in time for plan design and certification for PY 2023.
See 86 FR 24140, 24264.
\338\ Executive Order 14036 on Promoting Competition in the
American Economy, July 9, 2021, see 86 FR 36987.
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The standardized options that we are proposing are as follows: One
bronze plan, one bronze plan that meets the requirement to have an AV
up to 5 points above the 60 percent standard, as specified in Sec.
156.140(c) (known as an expanded bronze plan), one standard silver
plan, one version of each of the three income-based silver CSR plan
variations, one gold plan, and one platinum plan. We do not propose to
require FFE and SBE-FP issuers to offer standardized options for the
Indian CSR plan variations given that the cost sharing parameters for
these variations are already largely standard. Further, we do not
propose to require State Exchange issuers to offer the standardized
options in this proposal. We also propose that FFE and SBE-FP issuers
that are already required to offer standardized options under state
action taking place on or before January 1, 2020, such as issuers in
the state of Oregon,\339\ be exempt from the standardized options
requirements in this proposal.
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\339\ See Or. Admin. R. 836-053-0009.
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Additionally, in an approach similar to that taken in the 2018
Payment Notice, we propose two sets of standardized options to
accommodate different states' cost sharing laws. Specifically, we
propose that the first set of standardized options apply to all FFE and
SBE-FP issuers, excluding Delaware and Louisiana, and we propose that
the second set of standardized options apply to issuers in Delaware and
Louisiana in order to accommodate these two states' specialty tier
prescription drug cost sharing laws.
In conjunction with our standardized options proposal, we are
considering exercising the existing authority under Sec. 155.205(b)(1)
to differentially display standardized options on HealthCare.gov.
Similarly, we are considering resuming enforcement of the standardized
options display requirements for approved web-brokers and QHP issuers
using a direct enrollment pathway to facilitate enrollment through an
FFE or SBE-FP--including both the Classic DE and EDE Pathways--at
Sec. Sec. 155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively. If
we were to resume enforcement of these requirements, these entities
would be required to differentially display standardized options
beginning with the PY 2023 open enrollment period \340\ in accordance
with the requirements under Sec. 155.205(b)(1) in a manner consistent
with how standardized options are displayed on HealthCare.gov, unless
HHS approves a deviation. Any requests from web-brokers and QHP issuers
seeking approval for an alternate differentiation format would be
reviewed based on whether the same or similar level of differentiation
and clarity is being provided under the requested deviation as is
provided on HealthCare.gov.
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\340\ The PY 2023 OEP is scheduled from November 1, 2022 to
January 15, 2023. See 45 CFR 155.410(e)(3).
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We continue to believe that the differential display of
standardized options will not require significant modification of web-
broker and QHP issuer platforms, but that such display would provide an
important service and information for consumers seeking to enroll in
Exchange coverage. However, consistent with the approach finalized in
the 2018 Payment Notice,\341\ we also continue to recognize that system
constraints may prevent some web-brokers and QHP issuers from precisely
mirroring the HealthCare.gov display, which is why we would continue to
allow these entities to submit a request to deviate from the manner in
which standardized options are differentially displayed on
HealthCare.gov.
---------------------------------------------------------------------------
\341\ See 81 FR at 94118.
---------------------------------------------------------------------------
If we were to resume enforcement of these requirements, we reaffirm
that a QHP issuer using a direct enrollment pathway to facilitate
enrollment through an FFE or SBE-FP--including both the Classic DE and
EDE Pathways--would only need to differentially display those
standardized options it offers.\342\ Additionally, we intend to provide
access to information on standardized options to web-brokers and QHP
issuers through the Health Insurance Marketplace Public Use Files
(PUFs) and QHP Landscape file to further minimize burden on these
entities. We seek comment on this potential approach to display
requirements.
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\342\ Ibid.
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We are proposing this approach for several reasons. The 2019
Payment Notice eliminated standardized options with the intention of
maximizing innovation and variety at a time when the individual market
was considered to be at risk of destabilization. We believe that
current market conditions differ significantly from the market
conditions that defined the individual market when standardized options
were eliminated. For example, the number of issuers offering plans on
the Exchanges has increased considerably, the number of counties with a
single issuer offering plans through the Exchange has decreased
significantly, and the number of plan options that consumers have
access to on the Exchanges has increased substantially since
standardized options were discontinued in the 2019 Payment Notice. With
[[Page 673]]
increased enrollment, increased issuer participation, decreased single
issuer counties, and increased plan options available to consumers, we
believe that resuming standardized options at this time can play a
constructive role in enhancing consumer experience, increasing consumer
understanding, simplifying the plan selection process, combatting
discriminatory benefit designs that disproportionately impact
disadvantaged populations, and advancing health equity.
We are proposing to require issuers offering QHPs through FFEs and
SBE-FPs to offer standardized options, as opposed to allowing them to
choose to offer these standardized options, as was done in the past,
due in large part to the enhanced stability of the market as well as
the consumer benefits derived from the ability to compare the same
plans across different issuers. For example, in the FFEs and SBE-FPs in
PY 2019, there was an enrollee-weighted average of 1.2 catastrophic
plans, 7.9 bronze plans, 12.3 silver plans, 4.6 gold plans, and 1.1
platinum plans available per enrollee, amounting to a total of 25.9
plans available per enrollee. In the FFEs and SBE-FPs in PY 2022, based
on current filing data, it is expected that there will be an enrollee-
weighted average of 2.7 catastrophic plans, 40.4 bronze plans, 45.3
silver plans, 19.2 gold plans, and 1.6 platinum plans available per
enrollee, amounting to a total of 106.5 plans available per enrollee.
The proliferation of choices available to consumers on the Exchanges
that makes it more difficult to meaningfully assess all available plan
options.
The significant increase of plan offerings available on the
Exchanges over the last several PYs highlights the need to facilitate
the plan selection process for consumers. This is because when
consumers are faced with an overwhelming amount of plan choices, each
with slightly different cost sharing structures, these consumers can
experience choice paralysis. Along with plan standardization, there are
additional ways to facilitate more meaningful consumer choice, for
example though directly limiting the number of allowable offerings by
metal level or the imposition of strong meaningful difference
standards. For example, six states limit the number of plans that
issuers can offer through the Exchanges. We believe that requiring
issuers to offer these standardized options will play a constructive
role in facilitating the plan selection process, and we believe it will
enable consumers to make more meaningful comparisons between plan
offerings, thus optimizing the plan selection process. We also believe
that given the large number of plan offerings on the Exchanges, a
sufficiently diverse range of plan offerings exists for consumers to
continue to select innovative plans that meet their unique health
needs. We thus do not believe that requiring issuers to offer
standardized options will hamper innovative plan designs, as we noted
in the preamble to the 2017 Payment Notice.
We are proposing to require issuers in FFEs and SBE-FPs, but not
issuers in State Exchanges to offer standardized options for several
reasons. Eight State Exchanges already require or will require issuers
to offer standardized options by PY 2023. Imposing duplicative federal
standardized options requirements on issuers in State Exchanges that
already have existing state standardized options requirements runs
counter to the aforementioned goals of enhancing the consumer
experience, increasing consumer understanding, simplifying the plan
selection process, combatting discriminatory benefit designs, and
advancing health equity.
Second, we believe State Exchanges are uniquely positioned to best
understand the nature of their respective markets as well as the
consumers in these markets. The eight State Exchanges that require or
will require issuers to offer standardized options by PY 2023 have
conducted extensive stakeholder engagement in designing standardized
options that meet the unique needs of their respective consumers and
stakeholders. As such, we believe State Exchanges are best positioned
to design standardized options for their respective markets. We further
believe that states that have invested the necessary time and resources
to become State Exchanges have done so in order to implement innovative
policies that differ from those on the FFEs. We do not wish to impede
this innovation, so long as these innovations comply with existing
legal requirements. However, because we propose to impose this
requirement in the FFEs, and because the SBE-FPs use the same platform
as the FFEs, we propose to apply the requirements equally on FFEs and
SBE-FPs. Changing the platform to permit distinction on this proposal
between FFEs and SBE-FPs would require a very substantial financial and
operational burden that we believe outweighs the benefit of permitting
such a distinction.
We propose one exemption to the above requirement for FFE and SBE-
FP issuers to offer the specific standardized options that we propose
in this rule. Specifically, we propose that FFE and SBE-FP issuers that
are subject to existing state standardized options requirements under
state action taking place on or before January 1, 2020, such as issuers
in the state of Oregon, be exempt from being required to offer the
specific standardized options that we propose in this rule. We do not
wish to impose duplicative requirements that could conflict with these
existing state standardized options requirements and the QHP plan
designs applicable in such states. Regardless, HHS intends to
differentially display these existing state standardized options on the
Federal platform in the same manner as it displays the specific
standardized options that we propose in this rule.
We also believe that requiring FFE and SBE-FP issuers to offer
standardized options at every product network type, metal level, and
throughout every service area that they also offer non-standardized
options will ensure consumers have access to plans that have greater
pre-deductible coverage, as the standardized options included in this
proposal have greater pre-deductible coverage than most of the most
popular QHPs in the FFEs and SBE-FPs in PY 2021. Additionally, the fact
that these plans have standardized cost sharing parameters will enable
consumers to more meaningfully compare other meaningful plan
attributes, such as networks, formularies, and quality ratings during
the plan selection process, optimizing the plan selection process.
We are not proposing standardized options for the Indian CSR plan
variations at Sec. Sec. 156.420(b)(1) and (2) for several reasons.
First, the cost sharing parameters for the zero cost-sharing Indian CSR
plan variations are already designated. Specifically, in the zero cost-
sharing Indian CSR plan variations, eligible consumers do not have to
pay for any out-of-pocket costs for EHB. Second, in the limited cost-
sharing Indian CSR plan variations, eligible consumers also pay no out-
of-pocket costs for EHB, but only when they receive them from an Indian
health care provider or from another provider with a referral from an
Indian health care provider.
Similar to how we have not specified the cost-sharing parameters
for more than one tier of in-network providers or for out-of-network
providers for the standardized option plan designs that we are
proposing, we are proposing to not specify the cost-sharing parameters
for EHBs received from non-Indian health care providers for limited
cost-sharing Indian CSR plan variations. This is because eligible
consumers will also pay no costs for EHBs provided by
[[Page 674]]
Indian health care providers or from another provider with a referral
from an Indian health care provider, obviating the need to specify the
cost-sharing parameters for this type of plans. Altogether, we believe
that proposing standardized options for the two Indian CSR plan
variations, as well as applying the aforementioned requirements to the
two Indian CSR plan variations, would impose duplicative requirements
with little potential benefit since the cost sharing parameters for
these plans are already specified.
We believe that not limiting the number of non-standardized QHPs
that issuers can offer through the FFEs and SBE-FPs in PY 2023 will
ensure that consumers continue to have access to a range of plans that
meet their unique health needs. Furthermore, we do not wish to cause an
excessive amount of disruption, particularly in too condensed a
timeframe, and we do not wish to cause an excessive number of consumers
to have their coverage under their current plan discontinued for a
future plan year due to limits on the number of non-standardized
options. Therefore, to address choice overload and enhance consumer
choice-making ability, we are considering whether to limit the number
of non-standardized QHPs that issuers can offer through the FFEs and
SBE-FPs in future PYs, particularly in light of the significant growth
in the number of plan choices offered.
We also believe concurrently resuming differential display of
standardized options on HealthCare.gov per the authority at Sec.
155.205(b)(1) as well as resuming enforcement of the accompanying
display requirements applicable to approved web-brokers and QHP issuers
using a direct enrollment pathway to facilitate enrollment through an
FFE or SBE-FP--including both the Classic DE and EDE Pathways--at
Sec. Sec. 155.220(c)(3)(i)(H) and 156.265(b)(3)(iv), respectively, is
important considering that a steadily increasing number of consumers
are enrolling in Exchange plans via these pathways. In addition, it
will further streamline the plan selection and enrollment process for
Exchange consumers, aid consumers in distinguishing standardized
options from non-standardized options, and enhance consumer
understanding of the benefits of standardized options, such as having
more pre-deductible coverage, regardless of whether the consumer uses
HealthCare.gov or a non-Exchange website.
We also note that the comments we received in response to part 3 of
the 2022 Payment Notice informed our decision to resume the designation
of standardized options as well as our specific approach for doing so.
We received substantial comment from diverse stakeholders and carefully
considered these comments. Many commenters recommended requiring
issuers to offer standardized options and differentially or
preferentially displaying standardized options. Commenters explained
the importance of simplifying the complex process of purchasing
insurance and the role that standardized options could play in that
simplification.
Specifically, commenters explained that there is significant
variation in the cost sharing structures of non-standardized options,
much of which cannot be identified without a detailed analysis of
benefit designs. Commenters explained that many individuals do not have
the time, resources, or health literacy necessary for this level of
analysis. Commenters explained that enrollees instead typically choose
plans based on more readily available comparison points, like premiums,
rather than factors that would be illuminated by a more detailed
examination of plan designs, like expected out-of-pocket costs.
Commenters further explained that selecting a plan solely based on its
premium without taking into consideration other attributes of its
design, such as its cost sharing structure, deductible, or expected
out-of-pocket costs, can result in unexpected costs and financial harm
for consumers.
Commenters also explained that barriers to conducting a detailed
analysis of plan designs are particularly pronounced for those whose
resources are already severely constrained, including those with
limited English proficiency, those with inadequate internet access, and
those with complex health needs. Commenters explained that facilitating
consumer understanding and streamlining decision-making in the plan
selection process would benefit these populations as well as
populations with disproportionately high rates of chronic diseases.
Commenters also explained that standardized options could help
individuals more easily identify plans that may have potentially
discriminatory benefit designs. These commenters explained that
discriminatory benefit designs target individuals with particular
disabilities or health conditions by leaving them with substantial out-
of-pocket costs. Commenters explained that conditions that are
typically targeted, including HIV, diabetes, cancer, and mental health
conditions, disproportionately affect individuals of color. Commenters
explained that discriminatory benefit designs continue to violate the
PPACA's protections for people with preexisting conditions and its
prohibition on discrimination based on race, sex, and disability.
All of these considerations informed our decision to resume the
designation of standardized options as well as our specific approach
for designing and implementing standardized options requirements.
Regarding the methodology employed in designing these standardized
options, similar to the approach taken in past iterations of
standardized options in the 2017 and 2018 Payment Notices, we designed
these plans to be similar to the most popular QHPs in FFEs and SBE-FPs
in PY 2021.Several comments we received in response to part 3 of the
2022 Payment Notice proposed rule expressed support for continuing to
use this methodology in our approach to standardized options.
Commenters explained that continuing to use this methodology and
designing plans to be similar to the most popular QHPs in FFEs and SBE-
FPs would minimize the degree of disruption when these requirements are
implemented.
We designed the proposed standardized options to be similar to the
most popular QHPs based on an examination of the proportion of
consumers enrolled in plans with different cost sharing types
(including copay exempt from the deductible, copay subject to the
deductible, coinsurance exempt from the deductible, and coinsurance
subject to the deductible) for every benefit category in the actuarial
value calculator (AVC) at each metal level. We chose the cost sharing
type with the majority or plurality of enrollees. We then chose the
enrollee-weighted median values for this cost sharing type as the copay
amount or coinsurance rate for each benefit category before modifying
these plans to have an AV near the lower end of the de minimis range
for each metal level to ensure the competitiveness of these plans.
Nothing in the design of these standardized options supersedes the
obligation to cover certain benefits, such as the preventive services
required under Sec. 147.130, without cost sharing, even if such
benefits would also fall into a category for which cost sharing is
specified for the standardized option.
We applied this same methodology in selecting the deductible MOOPs
for the proposed plans at each metal level. Specifically, we selected
the enrollee-weighted median values for deductibles
[[Page 675]]
and MOOPs to ensure these plans would be similar to plans that the
majority or plurality of consumers are already currently enrolled in.
In addition to designing the proposed standardized options to be
similar to the enrollee-weighted medians for each benefit category, we
designed two sets of standardized options to accommodate applicable
state cost sharing laws in different sets of FFE and SBE-FP states.
This is similar to the approach taken the last time standardized
options were offered. Specifically, In the 2018 Payment Notice, we
designed three sets of plans tailored to unique cost sharing laws in
different states. The second and third sets of these standardized
options differed from the first set only to the extent necessary to
comply with state cost sharing laws. The second set of standardized
options in the 2018 Payment Notice was designed to work in states that:
(1) Require that cost sharing for physical therapy, occupational
therapy, and speech therapy be no greater than the cost sharing for
primary care visits; (2) limit the cost-sharing amount that can be
charged for a 30-day supply of prescription drugs by tier; or (3)
require that all drug tiers carry a copayment rather than coinsurance.
The second set of standardized options applied to Arkansas, Delaware
Iowa, Kentucky, Louisiana, Missouri, Montana, and New Hampshire. The
third set was designed to work in a state with maximum deductible
requirements and other cost sharing standards. The third set of
standardized options was designed to work in the Exchange in New
Jersey, which has since transitioned to become a State Exchange and is
thus outside the intended scope of this rulemaking for reasons
described above.
We included several of the defining features of the second set of
standardized options from the 2018 Payment Notice in the first set of
standardized options we are proposing in this rulemaking. As a result,
in the first set of standardized options, there is cost sharing parity
between the primary care visit, the speech therapy, and the
occupational and physical therapy benefit categories. There are also
copays for all prescription drug tiers, including the non-preferred
brand and specialty tiers, instead of coinsurance rates. Finally, the
copayment for the mental health/substance use disorder in-network
outpatient office visit sub-classification is equal to the least
restrictive level for copayments for medical/surgical benefits in the
in-network, outpatient office visit sub-classification (and copayments
apply to substantially all medical/surgical benefits in this sub-
classification), to ensure issuers are able to design plans that comply
with the Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008 (MHPAEA) and its implementing
regulations.\343\ We propose that this first set of standardized
options apply to all FFE and SBE-FP issuers, excluding issuers in
Delaware and Louisiana.
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\343\ In general, MHPAEA requires that the financial
requirements (such as coinsurance and copays) and treatment
limitations (such as visit limits) imposed on mental health or
substance use disorder benefits cannot be more restrictive than the
predominant financial requirements and treatment limitations that
apply to substantially all medical/surgical benefits in a
classification.
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We included all of the defining features of the second set of
standardized options from the 2018 Payment Notice in the second set of
standardized option plan designs we are proposing in this rule. As a
result, in this set of standardized options, similar to the first set
of standardized options, there is cost sharing parity between the
primary care visit, the speech therapy, and the occupational and
physical therapy benefit categories, and there are copays for all
prescription drug tiers, including the non-preferred brand and
specialty tiers, instead of coinsurance rates. Finally, the copayment
for the mental health/substance use disorder in-network outpatient
office visit sub-classification is equal to the least restrictive level
for copayments for medical/surgical benefits in the in-network,
outpatient office visit sub-classification (and copayments apply to
substantially all medical/surgical benefits in this sub-
classification), to ensure issuers are able to design plans that comply
with MHPAEA and its implementing regulations.
The feature that distinguishes the first set of standardized
options from the second is that the second set of standardized options
have copays of $150 or less for the specialty drug tiers of
standardized options at all metal levels. This feature was included in
the second set of standardized options to accommodate relevant
specialty tier prescription drug cost sharing laws in Delaware and
Louisiana. We therefore propose that this set of standardized options
apply to issuers in these two specific states.
The list of states for which these sets of standardized options
apply differs slightly from the list of states for which the sets
applied in the 2018 Payment Notice. Specifically, in the 2018 Payment
Notice, the second set of standardized options applied to Arkansas,
Delaware, Iowa, Kentucky, Louisiana, Missouri, Montana, and New
Hampshire (with the first set applying to the rest of the FFE and SBE-
FP states), whereas in the current proposal, we propose that the second
set of standardized options apply only to Delaware and Louisiana (with
the first set applying to the rest of the FFE and SBE-FP states).
This is because we incorporated the other two defining features of
the second set of standardized options in the 2018 Payment Notice (that
is, cost sharing parity between the physical therapy, occupational
therapy, and speech therapy AVC benefit categories with the primary
care visit AVC benefit category, and all drug tiers carry a copayment
rather than coinsurance) in both sets of standardized options in the
current proposal. We made this decision primarily because incorporating
these two design features into the plan designs had a negligible impact
to these plans' AVs, and including these features in both sets of
standardized options decreases operational complexity and allows plan
designs targeted to these specific states. As a result, the first set
of standardized options can now be used in Arkansas, Iowa, Kentucky,
Missouri, Montana, and New Hampshire.
We seek comment on this proposal, including comment on (1)
requiring FFE and SBE-FP issuers to offer standardized options at every
product network type, metal level, and throughout every service area
that they offer non-standardized options; (2) not limiting the number
of non-standardized options that issuers can offer through the
Exchanges; (3) the feasibility, advantages, and disadvantages of
gradually limiting the number of plan options over the course of
several PYs; (4) whether standardized options should be differentially
displayed on HealthCare.gov as well as the best manner for doing so;
(5) whether web-brokers and issuers using the Classic DE and EDE
Pathways should remain subject to differential display requirements;
(6) the continuation of an exceptions process that allows these
entities to deviate from the display of standardized options on
HealthCare.Gov; (7) exempting State Exchange issuers from these
requirements; (8) whether these plan designs should apply to State
Exchanges that do not use the Federal platform and that have not
implemented their own standardized options; (9) exempting FFE and SBE-
FP issuers that are subject to existing state standardized options
requirements under state action taking place on or before January 1,
2020 from being required to offer the standardized options in this
proposal; (10) the
[[Page 676]]
methodology used to design these standardized options; (11) if these
standardized options are compliant with state cost sharing laws in FFE
and SBE-FP states; (12) the cost sharing parameters and plan designs
for these standardized options; (13) how these plans can be designed in
a way that maximizes the likelihood that plans will be able to comply
with MHPAEA; (14) the policy approach for PYs 2023 and beyond; and (15)
having two sets of standardized options (that is, a separate set for
Delaware and Louisiana).
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BILLING CODE 4120-01-C
11. Network Adequacy (Sec. 156.230)
We propose to adopt FFE QHP certification standards that would
ensure that QHP enrollees would have sufficient access to providers.
HHS is of the view that strong network adequacy standards are necessary
to achieve greater equity in health care and enhance consumer access to
quality, affordable care through the Exchanges. We have engaged and
received feedback from numerous stakeholders representing diverse
perspectives in developing these policy proposals.
a. Background of Network Adequacy Standards
Section 1311(c)(1)(B) of the ACA directs HHS to establish by
regulation certification criteria for QHPs, including criteria that
require QHPs to ensure a sufficient choice of providers (in a manner
consistent with applicable provisions under section 2702(c) of the PHS
Act), and provide information to current and prospective enrollees on
the availability of in-network and out-of-network providers. Federal
network adequacy standards were first detailed in the Patient
Protection and Affordable Care Act; Establishment of Exchanges and
Qualified Health Plans; Exchange Standards for Employers \344\ and
codified at Sec. 156.230. HHS seeks to ensure that quantitative,
prospective network adequacy reviews \345\ occur for QHPs offered
through the FFEs so that enrollees have reasonable, timely access to
health care providers.
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\344\ https://www.federalregister.gov/documents/2012/03/27/2012-6125/patient-protection-and-affordable-care-act-establishment-of-exchanges-and-qualified-health-plans.
\345\ Prospective network adequacy reviews would occur during
the QHP certification process.
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The FFEs conducted network adequacy reviews of time and distance
standards for QHPs for PYs 2015-2017. The Market Stabilization \346\
final rule deferred reviews of network adequacy for QHPs to states that
HHS determined to have a sufficient network adequacy review process, an
approach that was extended by the 2019 Payment Notice.\347\
Specifically, CMS deferred to states that possessed sufficient
authority to enforce standards that were at least equal to the
reasonable access standard defined in Sec. 156.230 and that had the
means to assess the adequacy of plans' provider networks. For PYs 2018-
2022, HHS determined that all states had sufficient legal authority and
means to assess the adequacy of plans' provider networks. On March 4,
2021, as noted previously, the United States District Court for the
District of Maryland decided City of Columbus, et al. v. Cochran.\348\
One of the policies the court vacated was the 2019 Payment Notice's
elimination of the Federal Government's reviews of the network adequacy
of QHPs and plans seeking QHP certification to be offered through the
FFEs.
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\346\ https://www.federalregister.gov/documents/2017/04/18/2017-07712/patient-protection-and-affordable-care-act-market-stabilization.
\347\ https://www.federalregister.gov/documents/2018/04/17/2018-07355/patient-protection-and-affordable-care-act-hhs-notice-of-benefit-and-payment-parameters-for-2019.
\348\ 523 F. Supp. 3d 731 (D. Md. 2021).
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As such, we announced in Parts 2 and 3 of the 2022 Payment Notice
final rules our intent to undertake rulemaking to establish network
adequacy standards, beginning in this proposed rule for PY 2023.
b. FFE Network Adequacy Reviews
For the QHP certification cycle for PYs beginning in 2023, HHS
proposes to evaluate the adequacy of provider networks of QHPs offered
through the FFEs, or of plans seeking certification as FFE QHPs, except
for FFEs in certain states. HHS would not evaluate QHP network adequacy
in FFE states performing plan management functions that elect to
perform their own reviews of plans seeking QHP certification in their
state, so long as the state applies and enforces quantitative network
adequacy standards that are at least as stringent as the federal
network adequacy standards established for QHPs under Sec. 156.230,
and that network adequacy reviews are conducted prior to QHP
certification. States performing plan management functions are states
served by an FFE where the state has agreed to assume primary
responsibility
[[Page 681]]
for reviewing issuer-submitted QHP certification material and making
certification recommendations to HHS.
We seek comment on this proposal.
c. FFE Network Adequacy Standards Beginning With PY 2023
i. Network Adequacy Standards Applicable to Plans That Use a
Provider Network
Section 1311(c)(1)(B) of the ACA directs HHS to establish criteria
for the certification of health plan as QHPs, which includes the
requirement that QHPs must ``ensure a sufficient choice of providers.''
HHS codified QHP network adequacy requirements under Sec.
156.230(a)(2). In the 2012 Exchange final rule, we established the
minimum network adequacy criteria that health and dental plans must
meet to be certified as QHPs at Sec. 156.230. This regulation provided
that an issuer of a QHP that uses a provider network must maintain a
network that is sufficient in number and types of providers, including
providers that specialize in mental health and substance use disorder
services, to ensure that all services will be accessible to enrollees
without unreasonable delay. In the 2016 Payment Notice, we modified
Sec. 156.230(a) in part to specify that network adequacy requirements
only apply to QHPs that use a provider network, and that a provider
network includes only providers that are contracted as in-network.
Later in this section of the preamble, we propose to refine the
FFE's QHP certification standards regarding the adequacy of plans'
provider networks by imposing time and distance standards, appointment
wait time standards, and standards related to tiered networks.
ii. Time and Distance Standards
For the certification cycle for PYs beginning in 2023, HHS proposes
to adopt for QHPs offered through the FFEs time and distance standards
that HHS would use to assess whether FFE QHPs (or QHP candidates)
fulfill network adequacy standards applicable to plans that use
provider networks.
The proposed provider specialty lists for time and distance
standards for PY 2023 are informed by prior HHS network adequacy
requirements, consultation with stakeholders, and other federal and
state health care programs, such as Medicare Advantage and Medicaid.
The provider specialty lists cover more provider types than previously
evaluated under FFE standards so that QHP networks will be more robust,
comprehensive, and responsive to QHP enrollees' needs. The proposed
provider specialty lists are generally consistent with standards used
for plans in the Medicare Advantage program. For brevity purposes, when
discussing provider types for network adequacy, we will use the term
``behavioral health'' to encompass mental health and substance use
disorders.
HHS proposes reviewing additional specialties for time and
distance, beyond those included by Medicare Advantage, that are
necessary to meet the health care needs of QHP enrollees since Medicare
Advantage and the FFEs serve different enrollee populations. The
additional specialties proposed are: Emergency medicine, outpatient
clinical behavioral health, pediatric primary care, and urgent care.
Individual market health insurance has typically provided coverage of
these specialties, as well.
We are aware of issues faced by consumers where in-network
emergency physicians are in limited supply or not available at in-
network hospitals. To provide proactive consumer protections, and,
similar to the No Surprises Act, incentivize contracting between
emergency medicine physicians and issuers to increase enrollee access
to in-network providers, we propose adding emergency medicine
physicians to our provider specialty list for time and distance
standards. Behavioral health services are similarly critical to meeting
QHP enrollees' health needs, so we also propose to add outpatient
clinical behavioral health to our provider specialty list for time and
distance standards. Since QHP enrollees include dependents under the
age of 18, we propose adding pediatric primary care as a specialty. We
further propose to include urgent care facilities in our time and
distance standards because they help meet QHP enrollees time-sensitive
health care needs when primary care is unavailable and the issues do
not require emergency intervention. We seek to ensure the QHP enrollees
have access to a variety of behavioral health facilities at the
residential and inpatient levels of care. Consequently, we are also
proposing to broaden the inpatient psychiatry facility specialty to be
inpatient or residential behavioral health facility.
HHS proposes that time and distance standards would be calculated
at the county level and vary by county designation. CMS would use a
county type designation method that is based upon the population size
and density parameters of individual counties, in alignment with
Medicare Advantage. The time and distance standards would apply to the
provider specialty lists contained in Tables 18 and 19. To count
towards meeting the time and distance standards, individual and
facility providers listed on Tables 18 and 19 would have to be
appropriately licensed, accredited, or certified to provide services in
their state, as applicable, and would need to have in-person services
available.
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The county-specific time and distance parameters that plans would
be required to meet would be detailed in future guidance. These
parameters would be informed by industry standards.
Issuers that are unable to meet the specified standards would be
able to submit a justification to account for variances. HHS would
review such justifications to determine whether the variance(s) is/are
reasonable based on circumstances, such as the local availability of
providers and variables reflected in local patterns of care, and
whether offering the plan through the FFE would be in the interest of
qualified individuals and employers. We propose to codify the network
adequacy justification process in regulation at Sec. 156.230.
HHS seeks comment on this proposal, including on the specific
parameters for time and distance standards, and flexibilities that may
be needed in rural areas when there are provider or plan shortages. In
particular, HHS seeks comment on the parameters that should apply with
respect to behavioral health providers in order to ensure adequate
access to these services. HHS also seeks comment on the specialty list
to which time and distance standards would apply and whether HHS should
establish time and distance standards for additional specialties in
future PYs.
iii. Appointment Wait Times
For the certification cycle for PYs beginning in 2023, HHS proposes
to adopt appointment wait time standards to assess whether QHPs offered
through the FFEs fulfill network adequacy standards applicable to plans
that use a provider network. We are proposing a short list of critical
service categories for which appointment wait time standards would be
assessed. The proposed provider specialty list for appointment wait
time standards for PY 2023 is included below and is informed by prior
federal network adequacy requirements and consultation with
stakeholders, including issuers and other federal and state health care
programs, such as Medicare Advantage and Medicaid.
The appointment wait time standards would apply to medical QHPs.
For stand-alone dental plans (SADPs), only the dental provider
specialty within the Specialty Care (Non-Urgent) category of
appointment wait time standards would apply. To count towards meeting
appointment wait time standards, providers listed in Table 20 must be
appropriately licensed, accredited, or certified to practice in their
state, as applicable, and must have in-person services available.
[GRAPHIC] [TIFF OMITTED] TP05JA22.036
BILLING CODE 4120-01-C
The specific appointment wait time parameters that plans would be
required to meet, including specifications for individual provider and
facility types, would be detailed in future guidance. These parameters
would be informed by industry standards. Issuers applying for FFE QHP
certification would need to attest that they meet these standards as
part of the certification process. HHS proposes to conduct post-
certification reviews to monitor compliance with these standards. These
compliance reviews would occur in response to access to care complaints
or through random sampling.
Similar to the proposed justification process for time and distance
standards, issuers that are unable to meet the appointment wait time
standards would be able to submit a justification to account for
variances. HHS would review such justifications to determine whether
the variance(s) is/are reasonable based on circumstances,
[[Page 684]]
such as the local availability of providers and variables reflected in
local patterns of care, and whether offering the plan through the FFE
would be in the interest of qualified individuals and employers. We
propose to codify the network adequacy justification process in
regulation at Sec. 156.230.
HHS seeks comment on this proposal, including on the specialty list
to which appointment wait time standards would apply, specific
parameters for appointment wait time standards, and other ideas to
strengthen network adequacy policy in future years, such as provider-
enrollee ratios, provider demographics, and accessibility of services
and facilities. We also seek comment on possible methods to collect and
analyze claims data to inform future network adequacy standards and
other aspects of QHP certification that impact health equity.
iv. Tiered Networks
HHS proposes that, for plans that use tiered networks, to count
toward the issuer's satisfaction of the network adequacy standards,
providers must be contracted within the network tier that results in
the lowest cost-sharing obligation. For example, a QHP issuer cannot
use providers contracted with their PPO network when certifying a plan
using their HMO network, if use of PPO network providers would result
in higher cost-sharing obligations for HMO plan enrollees. For plans
with two network tiers (for example, participating providers and
preferred providers), such as many PPOs, where cost sharing is lower
for preferred providers, only preferred providers would be counted
towards network adequacy standards. We propose to codify the network
tiering requirement for network adequacy in regulation at Sec.
156.230.
Network adequacy standards are tailored to ensure QHP enrollees
have reasonable access to a sufficient number and type of providers to
meet their health care needs. HHS is aware of instances in which
issuers have attempted to satisfy QHP certification requirements
related to networks, such as ECP standards, using providers that would
require enrollees to pay higher cost sharing. We seek to ensure that
QHP enrollees have access to networks with sufficient numbers and types
of providers without the imposition of a higher cost-sharing
requirement.
HHS seeks comment on this proposal.
v. Telehealth Services
HHS proposes to require all issuers seeking certification of plans
to be offered as QHPs through the FFEs to submit information about
whether network providers offer telehealth services. HHS proposes that
this requirement would be applicable beginning with the QHP
certification cycle for PY 2023. We believe this information could be
relevant to HHS' analysis of whether a QHP meets network adequacy
standards. For PY 2023, this data would be for informational purposes;
it would be intended to help inform future development of telehealth
standards and would not be displayed to consumers. Issuers should not
construe this proposal to mean that telehealth services could be
counted in place of in-person service access for the purpose of network
adequacy standards.
As further explained in the ICRs and Regulatory Impact Analysis
sections for network adequacy, we believe the telehealth data
collection would create some additional burden for issuers who do not
already have this data. The estimated burden for the telehealth data
collection is included as part of the total burden for completing and
submitting the ECP/NA template and is detailed in the ICRs and
Regulatory Impact Analysis sections for network adequacy. We believe
that the potential benefits of obtaining this information and using it
to inform future network adequacy standards are in the best interests
of both QHP enrollees and QHP issuers. As such, we anticipate that the
additional burden would be mitigated by the expected benefits.
HHS seeks comment on this proposal, including comments on how HHS
might incorporate telehealth availability into network adequacy
standards in future PYs. We specifically seek comment on whether HHS
should consider aligning the FFE network adequacy standards with
Medicare Advantage's telehealth approach in which issuers are offered a
credit towards meeting time and distance standards.
vi. Solicitation of Comments--Unintended Impacts of Stronger Network
Adequacy Standards
HHS is of the view that the network adequacy standards we propose
in this rule are reasonable, necessary, and appropriate to ensure that
QHPs enrollees have the access to the in-network providers the ACA
requires. We acknowledge, however, that there is some risk that
stronger network adequacy standards could be leveraged to create an
uneven playing field in network agreement negotiations that could
result in higher health care costs for consumers. We are also
interested in exploring rules and policies that would promote
competition, taking into consideration the interests of issuers,
providers, and consumers by limiting the potential that network
adequacy standards may be used by parties to network agreements as
leverage to obtain more favorable contract terms, leading to higher
health care costs for consumers.
Strengthening network adequacy standards may increase the market
power of some providers and inadvertently increase the cost of health
care--for issuers, and, consequently, for enrollees. Some issuers seek
to counteract these costs by incentivizing enrollees to seek care from
lower-cost providers. However, some providers impose contractual
steering restrictions in contracts with issuers. For example, where
only one hospital is available to an issuer to meet the network
adequacy standard, that hospital could charge higher prices without the
threat of being excluded from the issuer's network. Such a price
increase may be avoided if the issuer can include the hospital in its
network, while giving incentives to its enrollees to use a more cost-
effective alternative. This procompetitive option to ``steer'' patients
away from high-cost providers can be precluded by the provider imposing
contractual steering restrictions on issuers. A rule that circumscribes
such steering restrictions may prevent providers from exploiting
network adequacy standards to charge higher prices. We seek comment on
the feasibility and parameters of such a rule and other solutions that
would balance bargaining power between issuers and providers in a way
that protects the interests of consumers.
The risk that a network adequacy standard may inadvertently empower
a provider to charge higher prices is particularly problematic when the
provider is part of a multi-provider hospital system and that system
contracts on an all-or-nothing basis with issuers. An all-or-nothing
contract is one that requires that an issuer contract with all
facilities in a health system if the issuer wants to include any of the
health system's facilities in its plan networks. When a multi-provider
hospital system requires an all-or-nothing provision in its network
agreements with issuers, issuers may be required to contract with the
entire system in order to meet the network adequacy standard, and this
may compel issuers to pay higher prices across the system, or else fail
to meet the network adequacy standard. For this reason, we are
interested in exploring how limiting ``all-or-nothing'' contracting
provisions in payer contracts might counteract the potential for
stronger network adequacy standards
[[Page 685]]
to increase health care costs and seek comment on this topic. We
understand that provider organizations typically use all-or-nothing
provisions to leverage the status of their facilities that plan
networks must have to satisfy network adequacy standards. These
circumstances may compel the issuer to pay higher prices across the
system. We are interested in understanding how this practice affects
enrollees' use of and access to in-network care and how it may
contribute to the cost of care. We seek comment on these issues,
including comments on ways that HHS could help stem the use of all-or-
nothing contracts that may drive up health care costs for consumers;
how issuers can use provider networks to drive costs down; and what
impact all-or-nothing contracting has on enrollees, plans, providers,
and the market.
vii. Solicitation of Comments--Network Adequacy in State Exchanges
HHS is interested in learning more about network adequacy in states
with State Exchanges. HHS understands that State Exchanges have a mix
of network adequacy policies in place, and that about 75 percent of
those states have at least one quantitative standard for time and
distance, appointment wait times, or both. While the new proposed
network adequacy standards for QHP issuers in FFEs differ from those in
State Exchanges, HHS has not been inclined to propose additional
regulations that specifically target network adequacy reviews for QHP
issuers in State Exchanges, and we are not inclined to propose
regulating network adequacy for State Exchanges at this time. However,
we are considering whether there is a need for greater alignment in FFE
and State Exchange network adequacy standards.
Starting in PY 2022, there will be 21 State Exchanges. We are
concerned that there is no preferred network adequacy model that is
shared among states, which indicates that there is no general agreement
among states or Exchanges regarding what exactly constitutes an
adequate network. Moreover, the proliferation of narrower networks in
recent years presents a number of potential consumer protection
concerns, including whether a narrow network has sufficient capacity to
serve plan enrollees, or whether providers may be too geographically
dispersed to be reasonably accessible. We are aware of the NAIC Health
Benefit Plan Network Access and Adequacy Model Act,\349\ which includes
recommendations for network adequacy standards to which states could
hold their issuers accountable, and requires submission of access
plans. Since there has been limited uptake of the full Model Act by
states, there remains a lack of consistency in network adequacy
standards among states and Exchanges.
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\349\ https://content.naic.org/sites/default/files/inline-files/MDL-074.pdf.
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HHS seeks comment on whether these conditions necessitate a more
coordinated, national approach to network adequacy rules across all
Exchanges that is suited to address contemporary conditions in the
health care markets. For example, we seek comment on whether in future
PYs, HHS should consider imposing network adequacy rules in FFEs and
State Exchanges that would be intended to increase the standardization
of network adequacy across the Exchanges. Moreover, we seek comment on
specific measures to support such standardization to ensure that all
Exchange enrollees can access the benefits and services under their
plans as required by the ACA. We further seek comments that identify
specific gaps in provider accessibility that exist under disparate
State Exchange network adequacy standards that might be addressed
through greater federal regulation of network adequacy standards across
all Exchanges.
12. Essential Community Providers (Sec. 156.235)
Essential community providers (ECPs) include providers that serve
predominantly low-income and medically underserved individuals, and
specifically include providers described in section 340B(a)(4) of the
PHS Act and section 1927(c)(1)(D)(i)(IV) of the Social Security Act.
The ECP categories include: Family planning providers, Indian health
care providers, Federally Qualified Health Centers, hospitals, Ryan
White providers, and other ECP providers. QHP issuers must include a
sufficient number and geographic distribution of ECPs in their
networks, where available. Section 156.235 establishes the requirements
for inclusion of ECPs in QHP provider networks and provides an
alternate standard for issuers that provide a majority of covered
services through physicians employed directly by the issuer or a single
contracted medical group.
In assessing the appropriate PY 2023 ECP standard for medical QHP
and SADP QHP certification, HHS has considered multiple options for
strengthening our ECP policy. After careful consideration, HHS proposes
the approaches described below. States performing plan management
functions in the FFEs would be permitted to use a similar approach.
Section 156.235(a)(2)(i) provides that a plan has a sufficient
number and geographic distribution of ECPs if it demonstrates, among
other criteria, that the network includes as participating
practitioners at least a minimum percentage, as specified by HHS. HHS
proposes that for PY 2023 and beyond, the required ECP provider
participation standard be raised from 20 percent to 35 percent of
available ECPs based on the applicable PY HHS ECP list, including
approved ECP write-ins that would also count toward a QHP issuer's
satisfaction of the 35 percent threshold. HHS would consider a plan to
have satisfied the regulatory standard if the issuer contracts with at
least 35 percent of available ECPs in each plan's service area to
participate in the plan's provider network. The calculation methodology
outlined in the 2018 Letter to Issuers in the federally-facilitated
Marketplaces and 2018 Payment Notice would remain unchanged for issuers
offering plans with a provider network.
The PY 2023 HHS ECP list will be based on data maintained by HHS as
well as provider data that HHS receives directly from providers through
the ECP petition process for PY 2023. HHS will include on the PY 2023
HHS ECP list those providers that submitted an ECP petition during the
ECP petition window that closed on August 18, 2021, and that meet the
definition of an ECP under Sec. 156.235.
In developing this proposal, HHS considered that when the ECP
threshold was 30 percent in PYs 2015-2017, all QHP issuers satisfied
the 30 percent threshold with minimal reliance on ECP write-ins and
justifications. In PYs 2018-2021, when the ECP threshold was 20
percent, all QHP issuers satisfied the lower threshold with ease and
very little reliance on ECP write-ins and justifications. Beginning in
2019, HHS began publication of the ``Rolling Draft ECP list'', which
significantly eased issuer burden for satisfying a higher threshold by
allowing issuers to preview changes (that is, additions and removals)
to the ECP list year-round in preparation for upcoming plan year
contracting. Finally, in PY 2021, the percentage of medical and dental
FFE issuers that could have satisfied a 35 percent ECP threshold was 80
percent and 74 percent, respectively; while the mean and median ECP
score across all FFE issuers was 55 percent and 54 percent,
respectively.
HHS anticipates that any QHP issuers falling short of the 35
percent threshold for PY 2023 could satisfy the standard by using ECP
write-ins and
[[Page 686]]
justifications. As in previous years, if an issuer's application does
not satisfy the ECP standard, the issuer would be required to include
as part of its application for QHP certification a satisfactory
justification describing how the issuer's provider networks, as
presently constituted, provides an adequate level of service for low-
income and medically underserved individuals and how the issuer plans
to increase ECP participation in the issuer's provider network(s) in
future years. At a minimum, such justification must include the number
of contracts offered to ECPs for PY 2023, the number of additional
contracts an issuer expects to offer and the timeframe of those planned
negotiations, the names of the specific ECPs to which the issuer has
offered contracts that are still pending, and contingency plans for how
the issuer's provider network, as currently designed, will provide
adequate care to enrollees who might otherwise be cared for by relevant
ECP types that are missing from the issuer's provider network.
HHS also proposes that, for plans that use tiered networks, to
count toward the issuer's satisfaction of the ECP standard, ECPs must
be contracted within the network tier that results in the lowest cost
sharing obligation. For example, a QHP issuer cannot use the number of
ECPs contracted with their PPO network when certifying a plan using
their HMO network, if use of PPO network providers would result in
higher cost sharing obligations for HMO plan enrollees. For plans with
two network tiers (for example, participating providers and preferred
providers), such as many PPOs, where cost sharing is lower for
preferred providers, only the preferred network would be counted
towards ECP standards. We propose to codify the network tiering
requirement for ECP in regulation at Sec. 156.235.
Additionally, for PY 2023 and beyond, HHS proposes that issuers
could comply with the requirement at Sec. 156.235(a)(2)(ii)(B) to
offers contracts to at least one ECP in the category of `other ECP
providers'' by offering a contract to a Substance Use Disorder
Treatment Center. These facilities are critical to HHS' efforts to
ensure that low-income, medically underserved individuals have
sufficient access to this EHB. We are also considering making non-
substantive revisions to Sec. 156.235, which requires QHPs to offer
contracts to at least one ECP in each of the ECP categories, to improve
readability and clarity, and to more closely reflect how Exchanges may
operationalize this requirement. For example, the regulation text
presently does not include language that specifically identifies which
providers may fit the category of `Other ECP Providers.' We solicit
comments on whether clarifying revisions are necessary and on how best
to clarify this requirement in the regulation text.
In addition to these proposed changes, HHS seeks comment on whether
and how QHP issuers should increase the use of telehealth services as
part of their contingency planning to ensure access to adequate care
for enrollees who might otherwise be cared for by relevant ECP types
that may be missing from the issuer's provider network. We also seek
comment on if we should consider adding newly Medicare-certified Rural
Emergency Hospitals to our Hospitals ECP category.
These proposed changes are consistent with the directive from E.O.
13985. HHS anticipates positive health equity impact as we believe
these changes will increase access to quality, relevant health care for
low-income and medically underserved individuals. HHS seeks comment on
these proposals, including from ECPs and issuers serving low-income and
medically underserved populations. HHS also seeks comment on ideas for
further strengthening ECP policy.
14. Standards for Downstream and Delegated Entities (Sec. 156.340)
We propose to amend and add language to Sec. 156.340 to extend the
existing downstream and delegated standards to QHP issuers on all
Exchange models, including State Exchanges and State Exchange SHOPs,
and Exchange models that use the Federal platform, including, FFEs,
SBE-FPs, FF-SHOPs; and HHS also proposes to add a requirement that all
agreements between QHP issuers and their downstream and delegated
entities include language stating that the relevant Exchange authority,
including State Exchanges, may demand and receive the downstream or
delegated entity's books, contracts, computers, or other electronic
systems, including medical records and documentation, relating to the
QHP issuer's obligations in accordance with Federal standards under
paragraph (a) of this section until 10 years from the final date of the
agreement period. These changes would hold QHP issuers in all models of
Exchange responsible for their downstream and delegated entities'
adherence to applicable federal standards related to Exchanges, and to
make their oversight obligations, and the obligations of their
downstream and delegated entities, explicit in regulation and in the
QHP issuers' agreements with their downstream and delegated entities.
We also propose to amend the title of subpart D of 45 CFR part 156 from
``Standards for Qualified Health Plan Issuers on Federally Facilitated
Exchanges and State-Based Exchanges on the Federal platform'' to
``Standards for Qualified Health Plan Issuers on Specific Types of
Exchanges'' to align with the proposed changes to extend the
applicability of the Sec. 156.340 to all Exchange models.
Section 156.340 was originally adopted in 2013 as part of the first
Program Integrity Rule and is similar to existing standards for
downstream and delegated entity that contract with Medicare Advantage
Organizations.\350\ It currently provides that, notwithstanding any
relationship(s) that a QHP issuer may have with delegated or downstream
entities, the QHP issuer maintains responsibility for its compliance
and the compliance of any of its delegated or downstream entities, with
all applicable federal standards related to Exchanges, including those
at Sec. 156.340(a)(1) through (4). Specifically, these paragraphs
reference obligations set forth under: Subpart C of part 156, which
governs QHP minimum certifications standards for all types of Exchange,
with several provisions specific to FFEs or to Exchanges that use the
Federal platform; subpart K of part 155, which governs Exchange
functions pertaining to QHP certification for all types of Exchange,
with several provisions specific to FFEs; subpart H of part 155, which
governs the Exchange functions of the SHOP, including State Exchange
SHOPs, SBE-FP-SHOPs and FF-SHOPs; standards in Sec. 155.220 with
respect to agents, brokers, and web-brokers assisting with enrollment
in QHPs offered through FFEs, FF-SHOPs, SBE-FPs, and SBE-FP-SHOPs; and
standards in Sec. Sec. 156.705 and 156.715 for maintenance of records
and compliance reviews for QHP issuers operating in an FFE and an FF-
SHOP. In the 2019 Payment Notice, we amended Sec. 156.340(a)(2) to
include language incorporating cross-references to SHOP provisions, to
ensure consumers on the FF-SHOPs received the protections the provision
intended for them to receive.\351\
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\350\ 78 FR at 54120.
\351\ 83 FR at 17028.
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In this rule, we propose to amend paragraph (a) by adding language
stating that the applicable standards for which the QHP issuers and
their downstream and delegated entities are responsible depend on the
Exchange model in which the issuer provides coverage. We propose to
remove existing paragraphs
[[Page 687]]
(a)(1) through (a)(4) that currently identify the key applicable
standards as examples of the requirements with which QHP issuers must
ensure their downstream and delegated entities comply, and create a new
paragraph (a)(1) that outlines the standards applicable to QHP issuers
participating in State Exchanges. In proposed new paragraph (a)(1), QHP
issuers participating in State Exchanges, including State Exchange
SHOPs, would be responsible for ensuring their downstream and delegated
entities comply with the standards of subpart C of part 156 with
respect to each of its QHPs on an ongoing basis and the Exchange
processes, procedures, and standards in accordance with subparts H and
K of part 155, including Sec. Sec. 155.705 and 155.706 for the small
group market, unless the standard is specifically identified as
applicable to only the FFE or FF-SHOP. This new proposed paragraph
(a)(1) would generally extend applicability of the current downstream
and delegated standards captured in existing paragraphs (a)(1)-(a)(2)
of Sec. 156.340 to QHP issuers participating in State Exchanges,
including State Exchange SHOPs, if the standard is otherwise applicable
to the Exchange type in which the QHP issuer is operating.
We further propose to create a new paragraph (a)(2) to outline the
standards applicable to QHP issuers providing coverage on Exchange
models that use the Federal platform. In proposed new paragraph (a)(2),
QHP issuers participating in FFEs, FF-SHOPs, SBE-FPs, or SBE-FP-SHOPs
would be responsible for ensuring their downstream and delegated
entities comply with the standards of subpart C of part 156 with
respect to each of its QHPs on an ongoing basis; the Exchange
processes, procedures, and standards in accordance with subparts H and
K of part 155, including Sec. Sec. 155.705 and 155.706 for the small
group market; the standards of Sec. 155.220 with respect to agents,
brokers and web-brokers assisting with enrollment in QHPs; and the
standards of Sec. Sec. 156.705 and 156.715 for maintenance of records
and compliance reviews if applicable to the Exchange type in which the
QHP issuer is operating. This new proposed paragraph (a)(2) would apply
the current downstream and delegated standards in existing paragraphs
(a)(1) through (a)(4) of Sec. 156.340 to QHP issuers participating in
FFEs, FF-SHOPs, SBE-FPs, and SBE-FP-SHOPs if the standard is otherwise
applicable to the Exchange type in which the QHP issuer is operating.
We also propose to add a new paragraph (b)(5), pertaining to record
retention, incorporating the requirement that contracts between QHP
issuers and their downstream and delegated entities include language
that the relevant Exchange authority, including State Exchanges, may
demand and receive the delegated or downstream entity's books,
contracts, computers, or other electronic systems, including medical
records and documentation, relating to the QHP issuer's obligations in
accordance with Federal standards under paragraph (a) of this section
until 10 years from the final date of the agreement period. This
amendment would ensure the relevant Exchange authority--whether the
FFE, SBE-FP or State Exchange--has access to the records and
information from delegated and downstream entities that are necessary
to ensure compliance with applicable minimum Federal standards related
to Exchanges.
These proposed amendments to Sec. 156.340 will better align the
regulation with its intent and prevent confusion on the part of
regulated entities and their downstream and delegated entities.
We propose this amendment be applicable as of the effective date of
the final rule. We seek comment on these proposed amendments.
15. Payment for Cost-Sharing Reductions--Clarification of CSR Payment
and Data Collection Processes (Sec. 156.430)
HHS proposes to amend Sec. 156.430 to clarify when CSR data
submission is mandatory or voluntary. Section 156.430 establishes
parameters for the advance payment for CSRs, the associated data
submission standards, and how final CSR payment and charges are
reconciled. On October 11, 2017, the Attorney General issued a legal
opinion that HHS did not have a valid Congressional appropriation with
which to make CSR payments to issuers.\352\ As a result, CSR payments
ceased as of October 12, 2017.\353\ Because issuers were not receiving
CSR payments from HHS, beginning with the 2018 benefit year CSR
Reconciliation Data Submission process, HHS made the CSR data
submission process voluntary. To clarify the data submission
requirements, we propose to amend Sec. 156.430 to clarify that this
data submission is mandatory for those issuers that receive CSR
payments from HHS for any part of the benefit year and voluntary for
other issuers.
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\352\ Acting Secretary's memorandum enclosing Attorney General's
opinion regarding CSR payments (2017), available at https://www.hhs.gov/sites/default/files/csr-payment-memo.pdf.
\353\ Ibid.
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To do this, we are proposing several modifications to Sec.
156.430. First, we propose to amend Sec. 156.430(b)(1) to clarify that
when there is an HHS appropriation to make CSR payments to issuers, an
issuer will receive periodic advance payments to the extent permitted
by the appropriation and based on the advance payment amounts
established in guidance. We believe that this proposed change clarifies
that the data submission requirements are mandatory for those issuers
that receive CSR payments from HHS for any part of the benefit year.
Further, and in line with the current practice, HHS will continue to
provide those issuers that do not receive CSR payments from HHS the
option to submit CSR data.
Second, we propose to amend Sec. 156.430(d) to reflect a change of
focus from reconciliation of CSR amounts to the timing and nature of
CSR data submissions, specifically when CSR payments are made. We
propose to amend Sec. 156.430(d) to state that HHS will periodically
provide a submission window for issuers to submit CSR data documenting
CSR amounts issuers paid, as specified in Sec. 156.430(d)(1) and (2),
in a form and manner specified by HHS in guidance, and calculated in
accordance with Sec. 156.430(c). When an appropriation is available
for HHS to make CSR payments to QHP issuers, HHS will notify QHP
issuers that the submission of the CSR data is mandatory for those
issuers that received CSR payments from HHS for any part of the benefit
year, and will use the data to reconcile advance CSR payments to
issuers against the actual amounts of CSRs issuers provided, as
determined by HHS based on amounts specified in Sec. 156.430(d)(1) and
(2), and calculated in accordance with Sec. 156.430(c).
When CSR payments are not made, HHS will notify those QHP issuers
that did not receive CSR payments from HHS for any part of the benefit
year that the submission of the CSR data is voluntary. The CSR data
that must be submitted in either a voluntary or mandatory submission
includes the data elements listed in Sec. 156.430(d)(1) and (2). The
purpose of this change is to clarify when HHS will use CSR data to
reconcile CSR payments. Specifically, we are proposing that to the
extent that CSR payments from HHS are made to issuers, the CSR data
submission process would be mandatory for those issuers having received
CSR payments for any part of the benefit year from HHS, and would be
voluntary for issuers that did not receive CSR
[[Page 688]]
payments from HHS for any part of the benefit year. This approach is
consistent with how HHS has conducted these data submission processes
since the 2018 benefit year CSR data submission process.
Third, we propose to amend the title of Sec. 156.430(e) from
``Payment of discrepancies'' to ``Cost-sharing Reductions Payments and
Charges'' to reflect that this section governs both payments to issuers
for CSR and charges levied against issuers for CSR.
Lastly, we propose to amend Sec. 156.430(e)(1) to clarify that HHS
will collect data regarding the CSRs actually provided by issuers to
their enrollees as opposed to collecting data on the dollar value of
CSRs HHS provided to the issuer, and to further clarify that HHS only
pays reconciled CSR amounts when there is an appropriation to make CSR
payments and to the extent permitted by such appropriation. We believe
these proposed changes would provide issuers with further clarity
regarding the intention of CSR data submission requirements.
We note that, regardless of whether HHS makes CSR payments, issuers
are required to provide CSRs to enrollees as specified at Sec.
155.1030. We solicit comment on these proposals.
16. Quality Standards: Quality Improvement Strategy (Sec. 156.1130)
In accordance with section 1311(c)(1)(E) of the ACA, quality
improvement strategies described in section 1311(g)(1) of the ACA must
be implemented across Exchanges as a QHP certification requirement.
Section 1311(g)(1) of the ACA defines a QIS as a payment structure that
provides increased reimbursement or other incentives for implementing
activities related to the five health care topic areas defined in
statute: Improving health outcomes of plan enrollees, preventing
hospital readmissions, improving patient safety and reducing medical
errors, promoting wellness and health, and reducing health and health
care disparities. Under Sec. 156.1130(a), a QHP issuer participating
in an Exchange for 2 or more consecutive years must implement and
report on a QIS, including a payment structure that provides increased
reimbursement or other market-based incentives in accordance with the
health care topic areas in section 1311(g)(1) of the ACA, for each QHP
offered in an Exchange, consistent with the guidelines developed by HHS
under section 1311(g) of the ACA. In the 2016 Payment Notice, HHS
established a phase-in approach for QIS implementation standards and
reporting requirements to provide QHP issuers the necessary time to
understand the populations enrolling in a QHP offered through the
Exchange and to build quality performance data on their respective QHP
enrollees.\354\ HHS noted that implementation of a QIS should be a
continuous improvement process for which QHP issuers define the health
outcome needs of their enrollees, set goals for improvement, and
provide increased reimbursement to their providers or other market-
based incentives to reward achievement of those goals.\355\ In line
with this approach and pursuant to the authority granted under Sec.
156.1130(a) and section 1311(g) of the ACA, HHS proposes to update the
QIS standards and enter the next phase of implementation by adopting a
new guideline that would apply to QHP issuers beginning in 2023.
Specifically, we propose a new guideline under which QHP issuers would
be required to address health and health care disparities as a specific
topic area within their QIS, in addition to at least one other topic
area described in section 1311(g)(1) of the ACA beginning in 2023. We
propose this expansion of the QIS standards, which aligns with health
equity efforts across federal government policies and programs;
however, we are not proposing amendments to the regulatory text
outlined in Sec. 156.1130.
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\354\ 80 FR 10750 at 10844 (Feb. 27, 2015).
\355\ Ibid.
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Persistent inequities in health care outcomes exist in the United
States, including among populations enrolling in QHPs across Exchanges.
Belonging to a racial or ethnic minority group, living with a
disability, being a member of the lesbian, gay, bisexual, transgender,
and queer (LGBTQI+) community, having limited English proficiency,
living in a rural area, or being near or below the poverty level, is
often associated with worse health outcomes.\356\ Such disparities in
health outcomes are the result of a number of factors and exist
irrespective of health insurance coverage type. Although not the sole
determinant, poor health care access and provision of lower quality
health care contribute to health disparities. In fact, research has
shown that the expansion of health insurance coverage, for example
through Medicaid expansion under the ACA, and the resulting increased
access to health care, is linked to reductions in disparities in health
insurance coverage as well as reductions in disparities in health
outcomes.\357\
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\356\ See Lindenauer PK, Lagu T, Rothberg MB, et al. Income
Inequality and 30-Day Outcomes After Acute Myocardial Infarction,
Heart Failure, and Pneumonia: Retrospective Cohort Study. British
Medical Journal. 2013;346; Trivedi AN, Nsa W, Hausmann LRM, et al.
Quality and Equity of Care in U.S. Hospitals. New England Journal of
Medicine. 2014;371(24):2298-2308; Polyakova, M., et al. Racial
Disparities In Excess All-Cause Mortality During The Early COVID-19
Pandemic Varied Substantially Across States. Health Affairs. 2021;
40(2): 307-316; Rural Health Research Gateway. Rural Communities:
Age, Income, and Health Status. Rural Health Research Recap.
November 2018; https://www.minorityhealth.hhs.gov/assets/PDF/Update_HHS_Disparities_Dept-FY2020.pdf; www.cdc.gov/mmwr/volumes/70/wr/mm7005a1.htm; Poteat TC, Reisner SL, Miller M, Wirtz AL. COVID-19
Vulnerability of Transgender Women With and Without HIV Infection in
the Eastern and Southern U.S. Preprint. medRxiv.
2020;2020.07.21.20159327. Published 2020 Jul 24. doi:10.1101/
2020.07.21.20159327.
\357\ Guth M, Garfield R, Rudowitz R. The Effects of Medicaid
Expansion Under the ACA: Studies from Jan 2014 to Jan 2020.
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We are specifically committed to achieving equity in health care
outcomes for QHP enrollees by supporting QHP issuers in quality
improvement activities to reduce health and health care disparities,
and promoting issuer accountability for improving equity in the health
and health care of their enrollee populations. For the purposes of this
proposed rule, we are using the definition of ``equity'' established in
Executive Order 13985, issued on January 20, 2021, as ``the consistent
and systematic fair, just, and impartial treatment of all individuals,
including individuals who belong to underserved communities who have
been denied such treatment, such as Black, Latino, and Indigenous and
Native American persons, Asian Americans and Pacific Islanders and
other persons of color; members of religious minorities; LGBTQI+
persons; persons with disabilities; persons who live in rural areas;
and persons otherwise adversely affected by persistent poverty or
inequality.'' \358\ In light of the COVID-19 PHE, which is having a
disproportionate and severe impact on underserved populations, and in
line with the goals of Executive Order 13985, CMS is strengthening
efforts across all programs to address disparities and advance health
equity. This is a topic area that QHP issuers across the Exchanges have
increasingly been focusing on in their QIS submissions.
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\358\ 86 FR 7009 (Jan. 25, 2021), available at https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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Upon CMS evaluation of QHP issuer QIS submissions in the FFEs, an
estimated 60 percent of QIS submissions in PY 2020 did address health
care disparities. Building on the phase-in
[[Page 689]]
approach established in the 2016 Payment Notice and our experiences
evaluating QIS submissions over the years and during the COVID-19 PHE,
we now propose to update the QIS standards. We propose to require QHP
issuers to address health and health care disparities as one topic area
of their QIS in addition to at least one other topic area described in
section 1311(g)(1) of the ACA beginning in 2023. As previously noted,
we are proposing this expansion of the QIS standards, which aligns with
health equity efforts across federal government policies and programs;
however, we are not proposing amendments to the regulatory text
outlined in Sec. 156.1130. We seek comment on this proposal.
17. Disbursement of Recouped High-Cost Risk Pool Funds--Administrative
Appeals of Issuers of Risk Adjustment Covered Plans (Sec. 156.1220)
HHS proposes that any funds recouped as a result of a successful
high-cost risk pool administrative appeal under Sec.
156.1220(a)(1)(ii) would be used to reduce high cost-risk pool charges
for that national high-cost risk pool for the current benefit year, if
high-cost risk pool payments have not already been calculated for that
benefit year. If high-cost risk pool payments have already been
calculated for that benefit year, we propose to use any funds recouped
as a result of a successful high-cost risk pool administrative appeal
to reduce high-cost risk pool charges for that national high-cost risk
pool for the next benefit year. As discussed earlier in this rule, we
also proposed similar treatment of high-cost risk pool funds HHS
recoups as a result of audits of risk adjustment covered plans under
Sec. 153.620(c)(5)(ii) and as a result of actionable discrepancies
under Sec. 153.710(d). We propose to treat high-cost risk pool funds
recouped as a result of a successful appeal the same way, that is, the
recouped funds would be used to reduce high-cost risk pool charges for
that national high-cost risk pool for the next benefit year for which
high-cost risk pool payments have not already been calculated.
We also clarify that when HHS recoups high-cost risk pool funds as
a result of a successful administrative appeal, the issuer that filed
the appeal would then be responsible for reporting that adjustment to
its high-cost risk pool payments or charges in the next MLR reporting
cycle consistent with the applicable instructions in 45 CFR 153.710(h).
Additionally, for any benefit year in which high-cost risk pool charges
are reduced as a result of high-cost risk pool funds recouped as a
result of an actionable discrepancy, issuers whose charge amounts are
reduced would report the high-cost risk pool charges paid for that
benefit year net of recouped audit funds in the next MLR reporting
cycle consistent with 45 CFR 153.710(h).
We seek comment on this proposal.
18. Direct Enrollment With the QHP Issuer in a Manner Considered To Be
Through the Exchange (Sec. 156.1230)
We propose to amend Sec. 156.1230 such that its nondiscrimination
protections would explicitly prohibit discrimination based on sexual
orientation and gender identity. HHS previously codified such
nondiscrimination protections at Sec. 156.1230, but amendments made in
2020 to Sec. 156.1230 removed any reference to sexual orientation and
gender identity. If finalized, this proposal would revert Sec.
156.1230 to the pre-2020 nondiscrimination protections.
Section 156.1230(b)(2) states that the QHP issuer must provide
consumers with correct information, without omission of material fact,
regarding the FFE, QHPs offered through the FFE, and insurance
affordability programs, and refrain from marketing or conduct that is
misleading a consumer into believing they are visiting HealthCare.gov,
coercive, or discriminates based on race, color, national origin,
disability, age, or sex. Previously, in the 2017 Payment Notice final
rule, HHS finalized at Sec. 155.220(j)(2)(i) standards that prohibited
agents, brokers and web-brokers from discriminating on the basis of
sexual orientation and gender identity, among other factors.\359\ In
the 2018 Payment Notice final rule, we added this nondiscrimination
standard from Sec. 155.220(j) to Sec. 156.1230(b) so that the
nondiscrimination protections on the basis of sexual orientation and
gender identity also applied to issuers using direct enrollment on an
FFE.\360\ However, in the 2020 final rule related to section 1557, HHS
revised certain CMS regulations, including Sec. 156.1230(b)(2), by
removing sexual orientation and gender identity as bases of
discrimination subject to the CMS regulations' nondiscrimination
protections.\361\
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\359\ 81 FR 12204 (March 8, 2016).
\360\ 81 FR 94058 (December 22, 2016).
\361\ 85 FR 37160 (June 19, 2020); See id. at 37218-21 (the 2020
section 1557 final rule revised the following CMS regulations: 45
CFR 147.104, 155.120, 155.220, 156.200, 156.1230).
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CMS possesses statutory authority independent of section 1557 of
the ACA to prohibit discrimination in enrollment through the Exchanges
by issuers of QHPs on the Exchanges under the authority to establish
requirements with respect to the operation of Exchanges, the offering
of QHPs through such Exchanges, and other requirements as the Secretary
determines appropriate in sections 1321(a)(1)(A), (B), and (D) of the
ACA. Pursuant to this authority, in the 2018 Payment Notice final rule,
HHS finalized at Sec. 156.1230(b)(2) standards applicable to issuers
using direct enrollment on an FFE to require that issuers refrain from
marketing or conduct that is misleading, coercive, or discriminatory,
including on the basis of sexual orientation or gender identity. HHS
explained it was adding this nondiscrimination standard from Sec.
155.220(j) to Sec. 156.1230(b) so that the nondiscrimination
protections on the basis of sexual orientation and gender identity also
applied to issuers using direct enrollment on an FFE. HHS proposes to
exercise that same authority here to amend Sec. 156.1230(b) to again
prohibit issuers using direct enrollment on an FFE from discriminating
based on sexual orientation and gender identity. Sections
1321(a)(1)(A), (B), and (D) of the ACA are the same authority CMS
relies upon for implementation of existing nondiscrimination
protections at Sec. 156.200(e). Utilizing this same authority to again
prohibit discrimination based on sexual orientation and gender identity
at Sec. 156.1230(b) would be consistent with the authority CMS relies
upon for the existing protections at Sec. 156.1230(b) that currently
prohibit discrimination on the basis of race, color, national origin,
disability, age, or sex. We believe such amendments are warranted in
light of the existing trends in health care discrimination and are
necessary to better address barriers to health equity for LGBTQI+
individuals.
A more in-depth discussion of these developments and other factors
considered in proposing these amendments to CMS nondiscrimination
protections is included earlier in the preamble to Sec. 147.104 under
section III.B.1.b. of this preamble. For brevity, we refer back to that
section of the preamble rather than restating the issues here.
19. Solicitation of Comments--Choice Architecture and Preventing Plan
Choice Overload
One of the primary goals of the ACA is to provide consumers access
to quality, comprehensive health coverage options, as well as the
information and assistance they need to make coverage choices that are
right for them. For this reason, both Federal and State Exchanges
invest significant time and resources to building Exchanges that
[[Page 690]]
support consumer access to competitive health plan options that offer
sufficiently diverse benefit options that give consumers a meaningful
choice between Exchange coverage options. Exchanges also work to ensure
that QHP information is presented to consumers in a manner that is
clear and easy to understand, and allows consumers to accurately
recognize the material differences between plan options.
Although HHS continues to prioritize competition and choice on the
Exchanges, we are concerned about plan choice overload which can result
when consumers have too many choices in plan options on an Exchange. A
2016 report by the RAND Corporation reviewing over 100 studies
concluded that having too many health plan choices can lead to poor
enrollment decisions due to the difficulty consumers face in processing
complex health insurance information.\362\
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\362\ Taylor EA, Carman KG, Lopez A, Muchow AN, Roshan P, and
Eibner C. Consumer Decisionmaking in the Health Care Marketplace.
RAND Corporation. 2016.
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Earlier under this section E. of the preamble, we introduced a
proposal to require that FFE and SBE-FP issuers offer certain
standardized options to be designed by HHS. Standardized options offer
a solution to the problems of choice overload through simplifying cost
sharing structures and increasing plan comparability by allowing
consumers to focus on premium price, provider network, and plan
quality.\363\ In light of the proliferation of seemingly similar plans
offered through the Exchanges over the last several years, HHS wishes
to explore whether it should limit the total number of plans issuers
may offer through the FFEs and SBE-FPs in future PYs in order to
further streamline and optimize the plan selection process for
consumers on the Exchanges.
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\363\ ``Facilitating Consumer Choice: Standardized Plans in
Health Insurance Marketplaces.'' Office of the Assistant Secretary
for Planning and Evaluation, U.S. Department of Health and Human
Services. December 2021. Available at https://aspe.hhs.gov/.
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HHS's desire to limit the number of plans that issuers can offer
through the Exchanges arises following the sharp increase in plan
offerings in recent years. For example, in the FFEs and SBE-FPs in PY
2019, there was an enrollee-weighted average of 1.2 catastrophic plans,
7.9 bronze plans, 12.3 silver plans, 4.6 gold plans, and 1.1 platinum
plans available per enrollee, amounting to a total of 27.1 plans
available per enrollee. In the FFEs and SBE-FPs in PY 2022, based on
current filing data, it is expected that there will be an enrollee-
weighted average of 2.7 catastrophic plans, 40.4 bronze plans, 45.3
silver plans, 19.2 gold plans, and 1.6 platinum plans available per
enrollee, amounting to a total of 109.2 plans available per enrollee.
In PY 2022, it is expected that several rating areas will have more
than 50 silver plans, excluding CSR variations, available to
consumers--a number we expect will make it difficult for consumers to
make reasonably informed decisions. This proliferation of plans is only
partially attributable to new market entrants, since in PY 2019,
consumers could select QHPs from an enrollee-weighted average of 2.8
issuers per enrollee, while in PY 2022, it is expected consumers will
be able to select QHPs from an enrollee-weighted average of 6.3 issuers
per enrollee. The fact that the enrollee-weighted average number of
plan offerings increased by a factor of four while the enrollee-
weighted average number of issuers only increased by a factor of just
over two between PYs 2019 and 2022 suggests consideration of the need
to limit the proliferation of seemingly similar plans in order to
further streamline and optimize the plan selection process for
consumers on the Exchanges.
HHS is concerned that having an excessive number of health plan
options may make consumers less likely to complete any plan selection
and more likely to select a plan that does not match their health
needs. In studies of consumer behavior in Medicare Part D, Medicare
Advantage, and Medigap, a choice of 15 or fewer plans was associated
with higher enrollment rates, while a choice of 30 or more plans led to
a decline in enrollment rates.\364\ These conclusions are supported by
the comments received during prior rulemaking in which a significant
number of commenters raised concerns that removing tools that
facilitate the plan selection process causes consumers to face choice
paralysis and leads to a reduction in overall enrollment in QHPs,
undermining the purpose of Exchanges--to allow people to compare and
purchase QHPs.
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\364\ Chao Zhou and Yuting Zhang, ``The Vast Majority of
Medicare Part D Beneficiaries Still Don't Choose the Cheapest Plans
That Meet Their Medication Needs.'' Health Affairs, 31, no.10
(2012): 2259-2265.
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HHS's experience during its annual open enrollment period also
suggests that ``many consumers, particularly those with a high number
of health plan options, find the large variety of cost-sharing
structures available on the Exchanges difficult to navigate.'' \365\
Thus, in order to streamline and optimize the plan selection process
for consumers on the Exchanges, HHS is interested in exploring possible
methods of improving choice architecture. Several proposals within this
rulemaking complement this goal, including the standardized options
proposal at Sec. 156.201 and the proposals to change the applicable AV
de minimis range at Sec. Sec. 156.140, 156.200, and 156.400.
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\365\ 80 FR 75,488, 75,542 (Dec. 2, 2015).
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Specifically, the standardized options proposal at Sec. 156.201
proposes to require FFE and SBE-FP issuers to offer plans with
standardized cost-sharing parameters at every product network type,
metal level, and throughout every service area that they offer non-
standardized options. Though this proposal does not limit the number of
non-standardized options, HHS intends to consider and propose future
rulemaking, as appropriate, to determine whether to limit the number of
non-standard plans that FFE and SBE-FP issuers may offer through the
Exchanges in PYs beginning on or after January 1, 2024.
Additionally, the proposals at Sec. Sec. 156.140, 156.200, and
156.400 propose to modify the AV de minimis ranges. HHS proposes to
modify the de minimis ranges at Sec. 156.140(c) beginning in PY 2023
to +2/-2 percentage points for all individual and small group market
plans subject to the AV requirements under the EHB package, other than
for expanded bronze plans, for which HHS proposes a de minimis range of
+5/-2. Under Sec. 156.200, HHS proposes, as a condition of
certification as a QHP, to limit the de minimis range to +2/0
percentage points for individual market silver QHPs. HHS also proposes
under Sec. 156.400 to specify de minimis ranges of +1/0 percentage
points for income-based silver CSR plan variations. HHS anticipates
that these proposals will have the effect of decreasing the number of
plan offerings due to more restricted AV de minimis ranges.
HHS is also considering resuming the meaningful difference standard
that was previously codified at 45 CFR 156.298. The meaningful
difference standard was first finalized in the 2015 Payment Notice,
revised in the 2017 Payment Notice, and discontinued and removed from
regulation in the 2019 Payment Notice. The meaningful difference
standard was originally intended to enhance consumer understanding of
the differences between plans and enable optimal consumer choice. It
was then considered to be no longer necessary given the decreased
number of issuers and plans offered through the FFEs and SBE-FPs in PY
2019. Given that the
[[Page 691]]
number of plans offered through the Exchanges has increased sharply
over the last several years, HHS believes that resuming the meaningful
difference standard could play a constructive role in limiting the
proliferation of seemingly similar plans on the Exchanges, thus further
streamlining and optimizing the plan selection process for consumers on
the Exchanges.
HHS also acknowledges that a number of State Exchanges have
successfully employed an active purchaser model in which these
Exchanges selectively negotiate contracts with issuers, limit the total
number of issuers that can offer QHPs through the Exchange, require
issuers to offer standardized options exclusively, and exclude plans
that have not demonstrated the administrative capability, prices,
networks or product designs that improve consumer value. HHS intends to
consider whether such a model would be appropriate in future PYs to
achieve the aforementioned goals of streamlining the plan selection
process for consumers on the Exchanges.
We seek comment on the utility of limiting the number of plans that
FFE and SBE-FP issuers can offer through the Exchanges in future PYs in
order to avoid plan choice overload and to further streamline and
optimize the plan selection process for consumers on the Exchanges. We
also seek comment on the impact of limiting the number of plans that
issuers can offer through the Exchanges and on effective methods to
achieve this goal, the advantages and disadvantages of these methods,
and if there are alternative methods we have not considered.
We also seek comment on other evidence-based approaches to improve
choice architecture within the Exchanges.
F. Part 158--Issuer Use of Premium Revenue: Reporting and Rebate
Requirements
1. Reimbursement for Clinical Services Provided to Enrollees (Sec.
158.140)
We propose to amend Sec. 158.140(b)(2)(iii) to clarify that only
those provider incentives and bonuses that are tied to clearly defined,
objectively measurable, and well-documented clinical or quality
improvement standards that apply to providers may be included in
incurred claims for MLR reporting and rebate calculation purposes.
Section 2718(a) of the PHS Act requires health insurance issuers
offering group or individual health insurance coverage (including a
grandfathered health plan) to, for MLR purposes, separately report the
percentage of total premium revenue (after certain adjustments)
expended on reimbursement for clinical services provided to enrollees
under such coverage, for activities that improve health care quality,
and on all other non-claims (administrative) costs. Section 2718(b) of
the PHS Act requires a health insurance issuer to provide an annual
rebate to each enrollee if the issuer's MLR falls below the applicable
MLR standard established in section 2718(b)(1)(A)(i) and (ii). Section
158.140 sets forth the MLR reporting requirements related to the
reimbursement for clinical services provided to enrollees, including a
requirement in Sec. 158.140(b)(2)(iii) that issuers must include in
incurred claims the amount of incentive and bonus payments made to
providers. Incentive and bonus payments made to providers were
originally required to be included in incurred claims to reflect
certain claim liability accounting practices of HMOs,\366\ but due to
the lack of clarity and specificity in the regulations, have resulted
in inclusion of a variety of incentive and bonus payments to providers.
However, inclusion of many types of provider incentives and bonuses in
incurred claims is appropriate and consistent with the purpose of the
statute to the extent such bonuses reward or incentivize providers to
deliver higher-quality care to consumers and thus lead to higher value
for consumers' premium payments.
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\366\ See 75 FR 74874 and https://www.govinfo.gov/content/pkg/FR-2010-12-01/pdf/2010-29596.pdf.
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In the course of conducting MLR examinations pursuant to Sec. Sec.
158.401 and 158.402, we have observed some issuers reporting incentive
or bonus payments to providers that are not based on quality or
performance metrics, but rather, involve transferring excess premium
revenue to providers to circumvent MLR rebate requirements and avoid
paying MLR rebates when issuers do not meet the applicable MLR
standard.
Most provider incentive and bonus agreements we encounter during
MLR examinations tend to have clinical metrics that must be met by the
provider, rather than the issuer, in order for payment to occur.
However, we have observed arrangements where the issuer's failure to
meet the MLR standard is itself the metric that triggers the payment of
a bonus to the provider. Under such arrangements, any time an issuer's
MLR falls below a specified threshold, including below the applicable
MLR standard (or, similarly, a metric tied to the issuer's
profitability or surplus exceeds a specified threshold), the issuer
must pay the excess profits to a provider group or hospital system. If
such payments are labeled as a provider ``incentive'' or ``bonus'' and
are included in the issuer's incurred claims, the issuer's MLR is
artificially raised so that it is close to or meets the applicable MLR
standard. This artificial inflation of MLR often eliminates most, or in
some cases even all, of the rebate owed to enrollees, regardless of how
low enrollees' claims costs are relative to premiums those enrollees
pay. Such artificial inflation of MLR denies consumers the protection
of receiving premium rebates guaranteed by the statute for the years
when claims costs are low due to low utilization of health care
services, such as the years when numerous medical procedures are
deferred due to a pandemic. In some cases, when such payments to
providers are inappropriately labeled as ``incentives'' or ``bonuses,''
they inflate paid claims by as much as 30 percent to 40 percent. The
incentive for such arrangements is particularly high for integrated
medical systems where the issuer is the subsidiary, owner, or affiliate
of a provider group or a hospital system. Further, in some cases these
``incentives'' or ``bonuses'' are not even paid to the clinical
providers, but rather to the non-clinical parent holding company of the
hospital or provider group and the issuer.
Although we consider inclusion of the provider ``incentives'' and
``bonuses'' described above in incurred claims inappropriate under
existing regulations because the described approach directly
contravenes the statute, in order to increase compliance and improve
program integrity, we propose to amend Sec. 158.140(b)(2)(iii) to
clarify that only those provider incentives and bonuses made to
providers that are tied to clearly defined, objectively measurable, and
well-documented clinical or quality improvement standards that apply to
providers may be included in incurred claims for MLR reporting and
rebate calculation purposes. We seek comment on this proposal.
2. Activities That Improve Health Care Quality (Sec. 158.150)
We propose to amend Sec. 158.150(a) to specify that only
expenditures directly related to activities that improve health care
quality may be included in QIA expenses for MLR reporting and rebate
calculation purposes.
Section 2718(a) of the PHS Act requires health insurance issuers
offering group or individual health insurance coverage (including a
[[Page 692]]
grandfathered health plan) to, for MLR purposes, report the percentage
of total premium revenue (after certain adjustments) expended on
reimbursement for clinical services provided to enrollees under such
coverage, for activities that improve health care quality, and on all
other non-claims costs. Section 158.221 defines the numerator of an
issuer's MLR to include the issuer's incurred claims plus the issuer's
expenditures for activities that improve health care quality, as
defined in Sec. Sec. 158.150 and 158.151. Section 158.150 describes
the types of activities that qualify as QIA, but does not specify the
types of expenses that may be included as QIA expenses, or the extent
to which such expenses must relate to the activity. The lack of clarity
in existing regulations has caused wide discrepancies in the types of
expenses that issuers include in QIA expenses and creates an unequal
playing field among issuers. Some issuers appropriately include only
direct expenses, such as the salaries of the staff performing actual
QIA functions in QIA expenses. However, other issuers additionally
allocate indirect expenses such as overhead, marketing, lobbying,
corporate or holding group overhead, and vendor profits in QIA
expenses. To the extent they can be quantified, such indirect expenses
often inflate QIA amounts by 33 percent to 50 percent, potentially
reducing rebates provided to enrollees while providing no value for
consumers' premium dollars. In many other cases, the amounts of
indirect expenses included in QIA expenses appear to be arbitrary
because there is no reasonable method to allocate them to QIA as the
expenses have no direct or quantifiable relationship to health care
quality.
A significant portion of QIA expenses is attributable to salaries
of employees actually performing the QIA. However, issuers' employees
often perform QIA only part of the time, while performing cost
containment and other strictly administrative and profit-generating
functions (such as negotiating provider rates, or claims adjustment and
appeals) the rest of the time. As a result, numerous fixed costs that
some issuers allocate to QIA simply because some of their staff spend
some of their time performing QIA would, for the most part, exist even
if the issuer did not engage in any QIA. Examples of such indirect
expenses include: Office space (including rent or depreciation,
facility maintenance, janitorial, utilities, property taxes, insurance,
wall art), human resources, salaries of general counsel and executives,
computer and telephone usage, and company parties and retreats,
including catering and travel.
Some issuers additionally allocate a fixed percentage of their
entire IT cost centers to QIA, even though the IT infrastructure
disproportionately supports regular business functions such as billing,
claims processing, financial analysis, and cost containment, and for
the most part would exist even if the issuer did not engage in any QIA.
Examples of such expenses include: Salaries of IT staff and call center
or help desk staff, data centers and warehouses, mainframe equipment,
network system applications and equipment, enterprise data management,
as well as depreciation, maintenance, and utilities associated with IT
equipment.
Some issuers include in QIA expenses amounts exceeding the cost of
providing the actual QIA service. For example, some issuers make a
profit when providing wellness incentives to enrollees, but structure
cost reporting in a manner that includes such profits in QIA expenses.
In addition, some issuers include the promotion or marketing of their
QIA services to group policyholders or enrollees as QIA expenses. Some
issuers also include the cost of developing the prices of QIA services
sold to group policyholders, or costs associated with calculating and
reporting QIA expenses.
Section 2718 of the PHS Act created the first national MLR
reporting and rebating program with the goal of putting downward
pressure on issuers' administrative expenses and encouraging issuers to
devote more of the premium dollars to medical spending and enrollee
health. Section 2718 of the PHS Act recognizes that investing in QIA
may improve enrollee health, thereby increasing the value of their
premium dollars. However, facility maintenance, utilities, human
resources, salaries of counsel and executives, computers, travel and
entertainment, IT systems, and marketing of issuers' products provide
no benefit to an enrollee's health. By including such costs in the MLR
numerator, the value of the enrollee's premium dollars is actually
reduced. Thus, indirect expenses such as those are described here are
classified as non-claims, administrative costs for purposes of
reporting incurred claims under Sec. 158.140. Allowing issuers to
report these same excluded expenses as expenditures on QIA is
inappropriate and would undermine the very purpose and intent of
section 2718 of the PHS Act. It would allow issuers to inflate QIA
costs by including expenses that do not actually improve health care
quality, particularly since these expenses are often fixed costs that
would occur regardless of whether the issuer engages in QIA. Further,
some issuers are not able to precisely determine what portion of
indirect costs is tied to QIA, as many issuers do not have an accurate
method to quantify the actual cost of each expense category as it
relates to each QIA, and thus issuers are often arbitrarily determining
or apportioning indirect expenses without adequate documentation to
support their determinations. The lack of clarity in Sec. 158.150 as
to what expenses may be included in QIA expenses has created an uneven
playing field that is unfairly boosting the MLRs of issuers that
include indirect or overhead expenses in QIA expenses as compared to
those that are not reporting these expenses in QIA expenses, thus
driving up health care spending and depriving consumers of value for
their premium dollars.
In order to ensure reporting consistency among issuers and ensure
that QIA expenses included in the MLR numerator represent actual value
provided for consumers' premium dollars, we propose to amend Sec.
158.150(a) to specify that only expenditures directly related to
activities that improve health care quality may be included in QIA
expenses.
We seek comment on this proposal.
3. Allocation of Expenses (Sec. 158.170)
As noted in part 2 of the 2022 Payment Notice final rule, on March
4, 2021, the United States District Court for the District of Maryland
decided City of Columbus, et al. v. Cochran, 523 F. Supp. 3d 731 (D.
Md. 2021). Among other things, the court vacated Sec. 158.221(b)(8),
which provided that beginning with the 2017 MLR reporting year, an
issuer had the option of reporting an amount equal to 0.8 percent of
earned premium in the relevant State and market in lieu of reporting
the issuer's actual expenditures for activities that improve health
care quality, as defined in Sec. Sec. 158.150 and 158.151.\367\
Accordingly, in part 2 of the 2022 Payment Notice final rule, we
finalized the deletion of Sec. 158.221(b)(8) and removed the option
allowing issuers to report the fixed, standardized amount of QIA and
reverted to requiring issuers to itemize QIA expenditures, beginning
with the 2020 MLR reporting year (MLR reports that were due by July 31,
2021). However, we inadvertently failed to make a conforming amendment
to
[[Page 693]]
Sec. 158.170(b). Section 158.170 addresses allocation of expenses in
relation to MLR reporting in general. Section 158.170(b) requires
issuers to describe the methods used to allocate expenses.
Specifically, Sec. 158.170(b) requires the report required in Sec.
158.110 to include a detailed description of the methods used to
allocate, among other things, ``quality improvement expenses (unless
the report utilizes the percentage of premium option described in Sec.
158.221(b)(8), in which case the allocation method description should
state so),'' to each health insurance market in each State. Given the
deletion of Sec. 158.221(b)(8) in part 2 of the 2022 Payment Notice
final rule, the reference in Sec. 158.170(b) to the percentage of
premium QIA reporting option described in Sec. 158.221(b)(8) is no
longer applicable. Accordingly, we propose make a technical amendment
to Sec. 158.170(b) to correct this oversight and remove the reference
to the percentage of premium QIA reporting option described in Sec.
158.221(b)(8).
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\367\ 86 FR 24140.
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G. Solicitation of Comments on Health Equity, Climate Health, and
Qualified Health Plans
On January 20, 2021, President Biden issued Executive Order 13985,
titled ``Advancing Racial Equity and Support for Underserved
Communities through the Federal Government,'' which established a
government-wide approach to advancing equity and addressing disparities
for historically marginalized communities in the United States. The
order defines equity as ``the consistent and systematic fair, just and
impartial treatment of all individuals, including individuals who
belong to underserved communities that have been denied such
treatment.'' \368\
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\368\ Advancing Racial Equity and Support for Underserved
Communities Through the Federal Government. Executive Office of the
President. 2021, https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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CMS' Office of Minority Health (CMS OMH) aligns with Healthy People
2030 that defines health disparities as ``a particular type of health
difference that is closely linked with social, economic, and/or
environmental disadvantage. Health disparities adversely affect groups
of people who have systematically experienced greater obstacles to
health based on their racial or ethnic group; religion; socioeconomic
status; gender; age; mental health; cognitive, sensory, or physical
disability; sexual orientation or gender identity; geographic location;
or other characteristics historically linked to discrimination or
exclusion.'' \369\
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\369\ https://health.gov/our-work/national-health-initiatives/healthy-people/healthy-people-2030/questions-answers.
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In alignment with the objectives set forth by the President's
Executive Order and CMS OMH, CMS aims to proactively advance health
equity and improve the health of all Americans, including racial and
ethnic minorities, sexual and gender minorities, people with
disabilities, individuals with limited English proficiency, rural
populations, and historically underserved communities.
Section 1311(e)(1)(B) of the ACA states an Exchange may certify a
health plan as a QHP if the Exchange determines that making available
such health plan through such Exchange is in the interests of qualified
individuals and qualified employers. Section 1321(a)(1) of the ACA
provides the Secretary with general rulemaking authority, including
with respect to setting standards for meeting the requirements for
offering QHPs through Exchanges and such other requirements as the
Secretary determines appropriate. In addition to the proposals in this
rule,\370\ CMS is considering other ways to incorporate health equity
standards by using the Secretary's authority to enhance criteria for
the certification of QHPs and/or leverage existing QHP requirements,
such as the Network Adequacy Standards at 45 CFR 156.230 and
Accreditation of QHP Issuers at 45 CFR 156.275. Furthermore, CMS seeks
input on additional ways to incentivize QHP issuers to improve health
equity and improve conditions in enrollees' environments, as well as to
address other SDOH outside of the QHP certification process.
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\370\ See, for example, the proposed updated quality standards
under 45 CFR 156.1130 for QHP issuer quality improvement strategies
and interoperability requirements under 45 CFR 156.221 for QHP
issuers in the FFE to implement and maintain a patient access
application programming interface.
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CMS seeks comment from stakeholders on advancing health equity
through QHP certification standards; advancing CMS's understanding of
the existing landscape of issuer collection of health equity data; and
assessing data sources that focus on population-level factors made
available by governments, quasi-governmental entities, data vendors and
other organizations, both generally and with respect to the following
specifics:
CMS seeks input on:
++ Requiring QHP issuers to obtain the National Committee for
Quality Assurance (NCQA) Health Equity Accreditation in addition to
their existing accreditation requirements,
++ Other health equity assessment tools that achieve this goal, and
(3) the challenges QHP issuers could face implementing a new
accreditation product on health equity.\371\
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\371\ https://store.ncqa.org/accreditation/health-equity-he.html.
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What demographic and/or SDOH data do QHP issuers currently
collect from enrollees? Should QHP issuers be required to collect
demographic and other SDOH data to help issuers gain a better
understanding of the populations they serve, and thereby develop more
equity-focused QHPs? Which data elements should be considered to
advance health equity within QHPs? What are some of the challenges and
barriers to collect this data?
What datasets related to population factors could CMS
leverage to analyze whether QHP networks are providing adequate access
to health care services for members within specific geographic areas?
What ability do QHP issuers have to tailor provider
networks based on the health needs of enrollees in specific geographic
areas?
What health conditions or outcome variables should CMS
analyze to identify gaps in the health care services? What are some of
the ways that CMS could measure QHP issuers' progress toward advancing
health equity?
Should CMS encourage QHP issuers to be accountable for
improving health outcomes across all populations equitably, while
acknowledging variations in SDOH?
Are there ways that CMS could incentivize QHP issuers to
advance health equity outside of the QHP certification requirement,
such as through other federal reporting requirements, including MLR
reporting?
What are the challenges QHP issuers face in promoting and
advancing health equity? What are some strategies that could overcome
those challenges?
What other health equity tools made available by
organizations should CMS consider to address health disparities within
QHPs?
HHS further seeks to explore how Exchanges and their constituent
organizations can more fully prepare for the harmful impacts of climate
change on their enrollees. Since we know that climate change causes
great and growing harm to Americans (through both catastrophic events
and chronic disease) and since we know that it will disproportionately
harm vulnerable populations, including those groups subject to health
disparities described
[[Page 694]]
above, HHS and CMS believe that it is critical to study and prepare for
these dire impacts. Generally, HHS seeks input on how Qualified Health
Plans can more effectively: (1) Determine likely climate impacts on
their enrollees and particularly the most vulnerable enrollees; (2)
determine potential costs of these impacts; (3) develop plans to
mitigate catastrophic and chronic impacts for these populations (that
is, plans for resilience); and (4) take responsibility for greenhouse
gas emission reduction across the networks of organizations that make
up their exchanges. Specific questions include:
Do Exchanges and issuers have a plan to assess, reduce or
mitigate its emissions in its operations or organizations?
What data do Exchanges and issuers currently collect with
respect to the climate threats faced by their enrollees and
particularly their most vulnerable enrollees? Do they complete risk
assessments or surveys that have a geographic or population focus?
What types of utilization reviews could issuers perform of
medical or prescription data to better understand the impact of climate
change events on their enrollees?
Do National Committee for Quality Assurance (NCQA) health
equity requirements include reviews of climate resilience?
What would incentivize Exchanges and issuers participating
in those Exchanges to more fully prepare for climate change's impacts
on vulnerable populations? What would incentivize them to take action
on decarbonization? How can issuers strengthen the overall health of
their enrollees to be more resilient to harmful climate change events?
Do issuers currently use, or could they use, apps and/or
AI to alert enrollees of severe climate events and steps to mitigate
related harmful effects (for example, extreme heat or wildfire events)?
What measures would be appropriate for assessing QHP
performance on climate change and health equity?
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995 (PRA), we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
OMB for review and approval. This proposed rule contains information
collection requirements that are subject to review by OMB. A
description of these provisions is given in the following paragraphs
with an estimate of the annual burden, summarized in Table 22. To
fairly evaluate whether an information collection should be approved by
OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment
on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of the required issues
under section 3506(c)(2)(A) of the PRA for the following information
collection requirements.
A. Wage Estimates
To derive wage estimates, we generally used data from the Bureau of
Labor Statistics to derive average labor costs (including a 100 percent
increase for fringe benefits and overhead) for estimating the burden
associated with the ICRs.\372\ Table 21 in this proposed rule presents
the mean hourly wage, the cost of fringe benefits and overhead, and the
adjusted hourly wage. As indicated, employee hourly wage estimates have
been adjusted by a factor of 100 percent. This is necessarily a rough
adjustment, both because fringe benefits and overhead costs vary
significantly across employers, and because methods of estimating these
costs vary widely across studies. Nonetheless, there is no practical
alternative, and we believe that doubling the hourly wage to estimate
total cost is a reasonably accurate estimation method.
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\372\ See May 2020 Bureau of Labor Statistics, Occupational
Employment Statistics, National Occupational Employment and Wage
Estimates. Available at https://www.bls.gov/oes/current/oes_stru.htm.
[GRAPHIC] [TIFF OMITTED] TP05JA22.037
[[Page 695]]
B. ICRs Regarding State Flexibility for Risk Adjustment (Sec. 153.320)
We are proposing to generally repeal the ability of states to
request a reduction in risk adjustment state transfers in any state
market risk pool starting with the 2024 benefit year, with an exception
for states that previously participated in risk adjustment state
flexibility. We propose to provide an exception for states that
previously submitted state flexibility requests under Sec. 153.320(d)
so that only those states would be able to continue to request this
flexibility in 2024 and future benefit years. We further propose to
remove as an option for a prior participant justification and HHS
approval of a state flexibility request the demonstration of state-
specific circumstances that warrant an adjustment to more precisely
account for relative risk differences in the state individual
catastrophic, individual non-catastrophic, small group, or merged
market risk pool, and to retain as the only option for state
justification and HHS approval the demonstration that the requested
reduction would have de minimis impact on the necessary premium
increase to cover the transfers for issuers that would receive reduced
transfer payments. This change would also apply beginning with 2024
prior participant benefit year requests from prior participant states.
As such, we propose various amendments to the risk adjustment state
flexibility regulations at Sec. 153.320(d) to reflect the general
repeal of this flexibility, with the exception for states that
previously participated, and to remove one of the criteria for state
justification and HHS approval beginning with benefit year 2024
requests. The burden associated with this requirement is the time and
effort for the state regulator to submit its request and supporting
evidence and analysis to HHS. We estimate that submitting the request
and supporting evidence and analysis will take a business operations
specialist 40 hours (at a rate of $75.32 per hour) to prepare the
request and 20 hours for a senior operations manager (at a rate of
$120.90 per hour) to review the request and transmit it electronically
to HHS. We estimate that each state seeking a reduction will incur a
burden of 60 hours at a cost of approximately $5,430.80 per state to
comply with this reporting requirement (40 hours for the insurance
operations analyst and 20 hours for the senior manager). The estimated
burden related to submission of these requests would be reduced as a
result of these proposed changes, since only one state, Alabama,
previously participated and would still be able to request this
flexibility. In the 2019 Payment Notice,\373\ we estimated that 25
states would submit requests and provided a total burden of
approximately 1,500 hours across all states, which would total $135,770
based on current wage estimates. Since there is only one prior
participating state, we estimate that this burden will be reduced by
$130,339.20 to a total annual cost of $5,430.80, reflecting the burden
associated with one state's submission. This information collection is
approved under OMB control number 0938-115, and if this proposal is
finalized, HHS would revise the information collection under OMB
control number 0938-1155 accordingly and provide the applicable comment
periods.
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\373\ 82 FR at 51118.
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C. ICRs Regarding Distributed Data and Risk Adjustment Data Submission
Requirements (Sec. Sec. 153.610 and 153.710)
Pursuant to section 1343(b) of the ACA, the Secretary, in
consultation with states, shall establish criteria and methods to be
used in carrying out the risk adjustment activities under this section.
Consistent with section 1321(c) of the ACA, the Secretary is
responsible for operating the risk adjustment program in any state that
fails to do so. As described in Sec. 153.610, health insurance issuers
are required to maintain risk adjustment data in order for HHS to
operate risk adjustment on behalf of a state. HHS employs a distributed
data approach when running risk adjustment on behalf of a state and
uses the same data for the purpose of determining the risk adjustment
user fee for each issuer. In this proposed rule, we propose to collect
five new data elements from issuers' EDGE servers through issuers' Edge
Server Enrollment Submission (ESES) files and risk adjustment
recalibration enrollment files: ZIP code, race, ethnicity, ICHRA
indicator and subsidy indicator. We also propose to extract these new
data elements as part of the enrollee-level EDGE data beginning with
the 2023 benefit year. In addition, we propose to begin extracting
three data elements issuers already report to their EDGE servers--plan
ID, rating area and subscriber indicator--as part of the enrollee-level
EDGE data beginning with the 2022 benefit year.
Section 153.700(a), requires an issuer of a risk adjustment covered
plan in a state where HHS is operating the risk adjustment program to
provide HHS, through its dedicated distributed data environment, access
to enrollee-level plan enrollment data, enrollee claims data, and
enrollee encounter data as specified by plan ID, rating area, and
subscriber indicator. Thus, the proposals to extract these data
elements will not pose additional operational burden to issuers, since
the creation and storage of the extract--which issuers do not receive--
is mainly handled by HHS. Therefore, we are not proposing to change the
existing burden for the proposal to extract plan ID, rating area, and
subscriber indicator.
For the five new data elements we propose to collect beginning with
the 2023 benefit year, we estimate that approximately 600 issuers would
be subject to this new data collection. We propose to collect these new
data elements via issuers' ESES files and risk adjustment recalibration
enrollment files. We estimate a cost of approximately $375.28 in total
labor costs for each issuer, which reflects 4 hours of work by a
management analyst per issuer at an average hourly rate of $93.82 per
hour. The cumulative additional cost estimate as a result of this
proposal is $225,168 for 600 issuers (2,400 total hours per year for
all issuers). The proposals to extract these data elements will not
pose additional operational burden to issuers, since the creation and
storage of the extract is mainly handled by HHS. If the proposed
collection of ZIP code, race, ethnicity, the ICHRA indicator, and the
subsidy indicator are finalized, we would revise the information
collection under OMB control number 0938-1155 accordingly and provide
the applicable comment periods.
D. ICRs Regarding Ability of States To Permit Agents and Brokers and
Web-Brokers To Assist Qualified Individuals, Qualified Employers, or
Qualified Employees Enrolling in QHPs (Sec. 155.220)
We propose to revise Sec. 155.220(c)(3)(i)(A) to include at
proposed new Sec. Sec. 155.220(c)(3)(i)(A)(1) through (5) a list of
the QHP comparative information web-broker non-Exchange websites are
required to display consistent with Sec. 155.205(b)(1). We also
propose to revise the disclaimer requirement in Sec.
155.220(c)(3)(i)(A) so that web-broker non-Exchange websites would be
required to prominently display a standardized disclaimer provided by
HHS stating that enrollment support is available on the Exchange
website and provide a web link to the Exchange website where enrollment
support for a QHP is not available using the web-broker's non-Exchange
website.
[[Page 696]]
This proposal should result in very limited new burden for web-
brokers. The proposed new standardized disclaimer would require web-
brokers to make minor updates to their non-Exchange websites in cases
where they do not support enrollment in all available QHPs. However, in
those cases, web-brokers would be displaying a disclaimer much like the
plan detail disclaimer that they have historically been required to
display.
We estimate this proposal will affect approximately 20 web-brokers
based on the number of web-brokers currently approved by CMS and our
internal knowledge of entities that have expressed interest in becoming
web-brokers. Given the minor modifications necessary to implement the
revised disclaimer in this proposal, we estimate a cost of $411 in
total labor costs for each web-broker, which reflects 5 hours of work
by Web Developers and Digital Interface Designers (15-1257) per web-
broker (100 hours across all web-brokers annually) at an average hourly
rate of $82.20. The cumulative additional cost estimate as a result of
this proposal is $8,220 for 20 web-brokers in the 2022 benefit year. If
this proposal is finalized, we would revise the information collection
under OMB control number 0938-1349 accordingly and provide the
applicable comment periods.
We propose to amend Sec. 155.220 to add a proposed new paragraph
(c)(3)(i)(M) that would require web-broker websites to prominently
display a clear explanation of the rationale for explicit QHP
recommendations and the methodology for the default display of QHPs on
their websites (for example, alphabetically based on plan name, from
lowest to highest premium, etc.). We believe this proposed new
requirement would provide consumers with a better understanding of the
information being presented to them on web-broker websites, thereby
enabling them to make better informed decisions and shop for and select
QHPs that best fit their needs.
We support web-broker websites' use of innovative decision-support
tools for consumers to help them shop for and select QHPs that best fit
their needs. However, web-broker websites that explicitly recommend or
rank QHPs do not always provide an explanation for their
recommendations or rankings. Similarly, web-broker websites may not
include an explanation of the methodology used for their default
displays of QHPs, and it may not otherwise be apparent what
methodologies are used. The absence of such explanations may cause some
consumers to misunderstand the bases for the recommendations displayed
to them on web-broker websites (whether explicit or implicit), or may
prevent them from assessing the value of the recommendations (for
example, whether a recommendation is based on the factors most
important to them). In addition, the lack of explanations for QHP
recommendations on web-broker websites may obscure that the web-broker
is recommending QHPs based on compensation the web-broker receives from
QHP issuers in violation of Sec. 155.220(c)(3)(i)(L). For these
reasons, we propose to amend Sec. 155.220 to add proposed new
paragraph (c)(3)(i)(M) that would require web-broker websites to
prominently display a clear explanation of the rationale for QHP
recommendations and the methodology for their default display of QHPs.
This proposal should result in very limited new costs for web-
brokers, since the information it would require they display on their
websites would only require text-based changes that are relatively easy
to implement. Furthermore, the extent of those textual updates should
be relatively minor in most cases. For example, if a web-broker is
recommending a QHP based on the fact that it has the lowest monthly
premiums for a consumer, that can likely be communicated in one or two
sentences of informational text, or possibly even in a single phrase or
set of short bullet points. Some web-brokers are already providing the
information that would be required by this proposal, and therefore
would not have to make any website updates. Other web-broker websites
do not explicitly recommend QHPs, and therefore the impact of this
proposal would be limited to providing similar information about the
methodology for their default display of QHPs (for example, explaining
QHPs are sorted from lowest to highest premium, etc.), assuming they do
not already provide that information.
We estimate this proposal will affect approximately 20 web-brokers.
Given the minor text-based changes necessary to implement the
informational text detailing the rationale for QHP recommendations and
the methodology for a default display of QHPs, we estimate a cost of
$411 in total labor costs for each web-broker, which reflects 5 hours
of work by Web Developers and Digital Interface Designers (15-1257) per
web-broker (100 hours across all web-brokers annually) at an average
hourly rate of $82.20. The cumulative additional cost estimate as a
result of this proposal is $8,220 for 20 web-brokers in the 2022
benefit year. If this proposal is finalized, we would revise the
information collection under OMB control number 0938-1349 accordingly
and provide the applicable comment periods.
E. ICRs Regarding Verification of Eligibility for Special Enrollment
Periods (Sec. 155.420)
Since 2017, the Exchanges on the Federal platform have implemented
pre-enrollment special enrollment period verification for special
enrollment period types commonly used by consumers to enroll in
coverage. We propose to amend Sec. 155.420 to add new paragraph (g) to
state that Exchanges may conduct pre-enrollment eligibility
verification for special enrollment periods at the option of the
Exchange. The Exchanges on the Federal platform would verify special
enrollment period eligibility for the most common special enrollment
period type, loss of minimum essential coverage. This special
enrollment period type comprises the majority of all special enrollment
period enrollments on the Exchanges on the Federal platform.
Since consumers on Exchanges on the Federal platform currently must
provide eligibility verification documentation for more special
enrollment period types, the provision would decrease burden on
consumers applying for special enrollment period types that no longer
require pre-enrollment verification. We expect that it takes an
individual, on average, about 1 hour to gather and submit the relevant
documentation needed for pre-enrollment special enrollment period
eligibility verification. This estimate is based on the assumption that
each individual required to submit documentation will submit, on
average, two documents for review. It could take significantly less
time if an individual already has the documents on hand, or more time
if the individual needs to procure documentation from a government
agency or other source.
Based on enrollment data for Exchanges on the Federal platform, we
estimate that HHS eligibility support staff members would conduct pre-
enrollment verification for 194,000 fewer individuals. We estimate that
Once individuals have submitted the required verification documents, it
would take an Eligibility Interviewer approximately 12 minutes (at an
hourly cost of $46.14) to review and verify submitted verification
documents. In 2017, the Exchanges on the Federal platform expanded pre-
enrollment special enrollment period verification to include five
special enrollment period types and estimated an annual additional
administrative burden of
[[Page 697]]
130,000 hours at a cost of $5,306,600.\374\ Limiting pre-enrollment
verification to one special enrollment period type would decrease the
annual administrative burden of special enrollment period verification.
The proposed change would result in a decrease in annual burden for the
federal government of 38,800 hours at a cost of $1,790,232. It would
also result in a decrease in annual burden for consumers attesting to
special enrollment period types that no longer require document
verification of 194,000 hours.
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\374\ 82 FR 18346.
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The proposed information collection requirements and the related
burden decrease discussed in this section will be submitted for OMB
review and approval as part of a revision of the information collection
currently approved under OMB control number 0938-1207 (Expiration date:
February 29, 2024).\375\
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\375\ Essential Health Benefits in Alternative Benefit Plans,
Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums
and Cost Sharing; Exchanges: Eligibility and Enrollment (CMS-10468).
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F. ICRs Regarding General Program Integrity and Oversight Requirements
(Sec. 155.1200)
We propose to add Sec. 155.1200(e) to permit a State Exchange to
meet the requirement to conduct an annual independent external
programmatic audit, as described at Sec. 155.1200(c), by completing an
audit that year under the SEIPM audit process we propose under Part
155, subpart P. We estimate that there would be a burden reduction for
State Exchanges related to the programmatic audit requirement under
Sec. 155.1200(c). In particular, the 18 State Exchanges that manage
their own eligibility and enrollment platforms would no longer be
required to dedicate resources to procure and reimburse auditing
entities for services rendered to complete the annual independent
external programmatic audits, assuming the State Exchanges were instead
completing the required SEIPM program process that year. Based on
industry estimates of the average cost of contracting an auditor to
conduct an independent external programmatic audit, HHS estimates that
the cessation of contracting such audit entities would result in an
annual cost reduction of approximately $90,000 for each State Exchange,
which is described in detail in the RIA section of this rule.
Additionally, staff resources would no longer be needed to submit
the results of the programmatic audit as a component of the State-based
Marketplace Annual Reporting Tool (SMART). This would result in a
reduction in cost and staff resources for each State Exchange. We
anticipate a reduction in cost associated with compiling data,
summarizing the programmatic audit results, and submitting to CMS.
State Exchanges are required to provide the results of the programmatic
audit in a public summary. This proposal would remove the burden
associated with reporting requirements, which includes the burden for a
management analyst taking 3 hours (at $93.82 an hour) to pull data into
a report, the time and effort necessary for a policy analyst taking 2
hours (at $93.82) to prepare the report of the audit results, and the
time for a senior manager taking 1 hour (at $155.52 an hour) to review
and submit to CMS. We estimate the burden of 6 hours at a cost of
$624.62 for each State Exchange. Therefore, the aggregate burden for
the 18 State Exchanges that manage their own eligibility and enrollment
platforms is 108 hours at a cost of $11,243.16.
Based on these estimates we expect the cost reduction associated
with compiling and reporting audit data to total $11,243.16 across all
18 State Exchanges beginning in the 2024 benefit year. The information
collection associated with the burden being reduced is covered under
OMB Control Number 0938-1244. If this rule is finalized as proposed, we
would revise the burden estimates covered under 0938-1244 before the
implementation of the SEIPM program.
We estimate this impact to take effect in June 2024 at the
earliest, which is when the State Exchanges would otherwise be
providing completed independent external audits as a component of their
PY 2023 SMART submissions. There would, however, be a corresponding new
burden created to complete the SEIPM process. For an estimate of the
burden created under SEIPM, please refer to section 14.
We request comment on the reduction in burden proposed, and
specifically seek feedback from State Exchanges regarding the annual
cost of the programmatic audit process.
G. ICRs Regarding State Exchange Improper Payment Measurement Program
(Sec. Sec. 155.1500-155.1540)
1. Data Collection (Sec. 155.1510)
In the preamble to Sec. 155.1510, we explain the sampling process
for each SEIPM review cycle. In Sec. 155.1510(a)(1), we propose that
HHS will provide State Exchanges with the pre-sampling data request,
which State Exchanges will complete and return to HHS. Both the pre-
sampling data request and the requested source data are in an
electronic format. The burden associated with completion and return of
the pre-sampling data request would be the time it would take each
State Exchange to interpret the requirements, analyze and design the
database queries based on the data elements identified in the SEIPM
data request form, develop the database queries, test the data, perform
verification and validation of the data, and return the form to HHS.
Once the pre-sampling data request is returned to HHS, HHS will
draw the sample for each State Exchange. In Sec. 155.1510(a)(2), we
propose that HHS will provide the sampled unit data request to the
State Exchange for completion and return to HHS. The sampled unit data
request will include the sampled units specific to each State Exchange.
Both the sampled unit data request and the requested source data are in
an electronic format. The burden associated with completion and return
of the sampled unit data request would be the time it would take each
State Exchange to interpret the requirements, analyze and design the
database queries based on the data elements identified in the SEIPM
data request form, develop the database queries, test the data, perform
verification and validation of the data, and return the form to HHS.
We expect respondent costs will not substantially vary since the
data being collected is largely in a digitized format and that each
State Exchange will be providing information for approximately 100
sampled units. We do not expect reporting costs to vary considerably
based on sample size. We seek comment on these assumptions.
We estimate completion of the pre-sampling data request would take
12 hours per respondent at an estimated $1,364 per respondent. We
estimate completion of the sampled unit data request would take 707
hours per respondent at an estimated cost of $73,054 per respondent. To
compile our estimates, we referenced our experience in collecting data
in our FFE pilot initiative. We identified specific personnel and the
number of hours that would be involved in collecting the sampled unit
data broken down by specific area (for example, eligibility
verification, auto re-enrollment, periodic data matching, enrollment
reconciliation, plan management, and manual reviews including document
retrieval). Additionally, to account for the time needed for any State
Exchanges to convert hard copies to a digitized format, we added 20
hours for each
[[Page 698]]
State Exchange into the burden estimates.
Hourly wage rates are based on May 2020 Bureau of Labor Statistics
Occupational Codes and vary from $45.98 (adjusted to $91.96 to account
for overhead) to $77.76 (adjusted to $155.52 to account for overhead)
depending on occupation code and function. With a mean hourly rate of
$103.50 for the respective occupation codes, the burden across the 18
State Exchanges equals 12,942 hours for a total cost of up to
$1,339,523. The burden related to this information collection is being
submitted to OMB for approval with this proposed regulation.
2. Determination of Error Findings Decision and Appeal Redetermination
(Sec. Sec. 155.1525 and 155.1530)
As described in the preamble to Sec. 155.1525, Redetermination of
Error Findings Decision, a State Exchange may file a request with HHS
to resolve issues with HHS' findings within the deadline prescribed in
the annual program schedule.
The burden associated with the information collection requirements
contained in Sec. Sec. 155.1525 and 155.1530 is the time and effort
necessary to draft and submit a request for a redetermination of an
error findings decision and, if requested, an appeal of a
redetermination decision. In accordance with 5 CFR 1320.4, information
collected during the conduct of an administrative action is not subject
to the PRA. As a result, we believe the burden associated with these
requirements is exempt from the PRA under 44 U.S.C. 3502(3)(A)(i).
3. Corrective Action Plan (Sec. 155.1535)
As described in the preamble to Sec. 155.1535, we are proposing
that State Exchanges may be required to develop and implement
corrective action plans following a completed SEIPM measurement
designed to reduce improper payments as a result of eligibility
determination errors. The burden associated with this requirement is
the time and effort put forth by State Exchanges to develop and submit
a corrective action plan to HHS. We estimate that it would take each
selected State Exchange up to 1,000 hours to develop a CAP. We estimate
that the total annual burden associated with this requirement for up to
18 State Exchange respondents would be up to 18,000 hours. Assuming the
management analyst average hourly rate of $93.82 per hour, we estimate
that the cost of a corrective action plan per State Exchange could be
up to $93,820, and for all 18 State Exchanges, up to $1,688,760. The
burden related to this information collection will be submitted to OMB
for approval after future rulemaking has been completed regarding the
CAP process and requirements.
H. ICRs Regarding State Selection of EHB-Benchmark Plan for Plan Years
Beginning on or After January 1, 2020 (Sec. 156.111)
We are proposing to eliminate the requirement at Sec. 156.111(d)
and (f) to require states to annually notify HHS in a form and manner
specified by HHS, and by a date determined by HHS, of any state-
required benefits applicable to QHPs in the individual or small group
market that are considered to be in addition to EHB in accordance with
Sec. 155.170(a)(3) and any benefits the state has identified as not in
addition to EHB and not subject to defrayal, describing the basis for
the state's determination.
Under this proposal, states would no longer be required to submit
an annual report that complies with each requirement listed at Sec.
156.111(f)(1) through (6), nor would HHS identify which benefits are in
addition to EHB for the applicable PY in the state if a state does not
submit an annual reporting package.
As states are already required under Sec. 155.170 to identify
which state-required benefits are in addition to EHB and to defray the
cost of QHP coverage of those benefits, the 2021 Payment Notice
estimated that a majority of states, approximately 41, would submit
annual reports and that 10 states would not submit annual reports.\376\
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\376\ 85 FR 29164, 29244.
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The 2021 Payment Notice estimated that the burden for each state to
meet this reporting requirement in the first year would be 30 hours,
with an equivalent cost of approximately $2,459, with a total first
year burden for all 41 states of 1,230 hours and an associated total
first year cost of approximately $100,829. Because the first year of
annual reporting was intended to set the baseline list of state-
required benefits which states would update as necessary in future
annual reporting cycles, the 2021 Payment Notice explained that the
burden associated with each annual reporting thereafter would be lower
than the first year. The 2021 Payment Notice therefore estimated that
for each annual reporting cycle after the first year the burden for
each state to meet the annual reporting requirement would be 13 hours
with an equivalent cost of approximately $1,117, with a total annual
burden for all 41 states of 533 hours and an associated total annual
cost of approximately $45,817. The average annual burden over 3 years
was estimated at approximately 765 hours with an equivalent average
annual cost of approximately $64,154.
Given that we did not require states to submit annual reports in
2021 pursuant to our enforcement posture in part 2 of the 2022 Payment
Notice final rule, if finalized as proposed, repealing the annual
reporting requirement would also remove the associated ICRs and the
anticipated burden on states submitting such reports. Thus, if
finalized as proposed, we will request discontinuation of the ICRs
associated with the repealed annual reporting requirement (OMB control
number: 0938-1174 Essential Health Benefits Benchmark Plans (CMS-
10448)/Expiration date: February 29, 2024).
I . ICR Regarding Differential Display of Standardized Options on the
Websites of Web-Brokers (Sec. 155.220) and QHP Issuers (Sec. 156.265)
In the current rulemaking, we consider resuming the differential
display of standardized options per the existing authority at Sec.
155.205(b)(1). We also consider resuming enforcement of the
standardized options differential display requirements for approved
web-brokers and QHP issuers using a direct enrollment pathway to
facilitate enrollment through an FFE or SBE-FP--including both the
Classic DE and EDE Pathways--at Sec. Sec. 155.220(c)(3)(i)(H) and
156.265(b)(3)(iv), respectively.
We estimate that a total of 110 web-brokers and QHP issuers
participating in the FFEs and SBE-FPs would be required to comply with
these requirements. We estimate that it would take a web developer/
digital interface designer (OES occupational code 15-1257) 2 hours
annually, at an average hourly cost of $82.20 per hour, to implement
these changes, at a total annual cost of $164.40 per entity. We
therefore estimate a total annual burden of 220 hours at a cost of
$18,804 for all applicable web-brokers and QHP issuers.
Consistent with the approach finalized in the 2018 Payment
Notice,\377\ we continue to recognize that system constraints may
prevent web-broker and QHP issuers from mirroring the HealthCare.gov
display. We would therefore continue to permit web-brokers and QHP
issuers that use a direct enrollment pathway to facilitate enrollment
through an FFE or SBE-FP to submit a request to deviate from the
display on HealthCare.gov, with approval from HHS. Any requests from
[[Page 699]]
web-brokers and QHP issuers seeking approval for an alternate
differentiation format would be reviewed based on whether the same
level of differentiation and clarity is being provided under the
requested deviation as is provided on HealthCare.gov.
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\377\ See 81 FR at 94118.
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We estimate that 55 of the above web-brokers and QHP issuers would
submit a request to deviate from the manner in which standardized
options are differentially displayed on HealthCare.gov. We estimate it
would take a compliance officer (OES occupational code 13-1041)
approximately 1 hour annually, at a rate of $72.70 per hour, to
complete the request to deviate from the display on HealthCare.gov as
well as the justification for the request. We therefore estimate a
total annual burden for all web-brokers and issuers subject to the
differential display requirements submitting a request to deviate of
approximately $3,998.50 beginning in 2023.
To account for the burden associated with this ICR, HHS will submit
a revised version of the existing PRA package for Non-Exchange Entities
(under OMB control number: 0938-1329 (CMS-10633)) which was previously
discontinued on March 4, 2020. This proposed rule serves as the initial
notice for the revised PRA package.
J. ICRs Regarding Network Adequacy and Essential Community Providers
(Sec. Sec. 156.230 and 156.235)
In this rule, HHS is proposing amendments to Sec. 156.230,
including adoption of standards related to time and distance and
appointment wait time to assess QHP issuers' fulfillment of the
reasonable access network adequacy standard. HHS is proposing to raise
the ECP threshold from 20 percent to 35 percent. Issuers will continue
to submit provider facility information and geographic location of
participating ECPs participating in an issuer's provider network or
other documentation necessary to demonstrate that an issuer has a
sufficient number and geographic distribution of ECPs for the intended
service areas. This is done to ensure QHP enrollees have reasonable and
timely access to providers that serve predominantly low-income,
medically underserved individuals in accordance with ECP inclusion
requirements found at Sec. 156.235.
Additionally, issuers must collect and submit provider information
necessary to demonstrate satisfaction of time and distance standards
and appointment wait time standards to ensure that an issuer's network
has fulfilled the network adequacy reasonable access standard found at
Sec. 156.230. Lastly, an issuer must report the offering of telehealth
services for each provider to help inform future development of
telehealth standards. We would provide the definition of telehealth and
ask issuers to respond yes or no as to whether each network provider
offers telehealth. As described in the preamble, issuers who do not
have the information available by the time of the QHP certification
process would be able to respond that they have requested the
information from the provider and are awaiting the response.
HHS anticipates burden for completing the ECP/NA template will
increase based on the changes in this proposed rule to an estimated 20
hours in total for each medical QHP submitted by issuers and 4 hours in
total for each SADP submitted by issuers. This estimate is inclusive of
the requirement to report provider facility information and geographic
location of ECPs in an issuer's provider network. Since we propose to
raise the ECP threshold from 20 percent to 35 percent, QHP issuers will
need to submit information on a sufficient number of their contracted
ECPs to meet the higher threshold.\378\ Some issuers have previously
only included enough contracted ECPs on the template in order to meet
the current threshold for that year's certification process. For those
issuers, the proposed increase in the ECP threshold would somewhat
increase burden in completing the ECP/NA template as they would need to
include more contracted ECPs on the template to meet the standard.
Notwithstanding, HHS estimates that the burden associated with showing
compliance with the increased ECP threshold will account for 3 hours of
the total 20 hours we estimate for completing the ECP/NA template for
medical QHPs and 1 hour of the total 4 hours we estimate for SADPs.
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\378\ The ECP/NA template requires QHP issuers to report only
that number of providers sufficient to demonstrate compliance with
relevant requirements.
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The 20-hour burden estimate for the ECP/NA template also includes
burden resulting from the requirement that QHP issuers report
information relevant to compliance with time and distance standards and
appointment wait time standards. For PYs 2018-2022, HHS deferred
reviews of network adequacy for QHPs to states that HHS determined to
have a sufficient network adequacy review process, which was all FFE
states for that time period. As HHS resumes network adequacy reviews,
we are proposing to include a broader provider specialty list for time
and distance standards than was evaluated for PYs 2015-2017, and to add
appointment wait time standards. HHS estimates that the burden
associated with the requirement that QHPs report information sufficient
to show compliance with the proposed network adequacy standards would
account for 12 of the total 20 hours we estimate for completing the
ECP/NA template for medical QHPs, and 1 hour of the total 4 hours we
estimate for SADPs.
The 20-hour estimate also includes the burden associated with the
requirement that issuers report whether network providers provide
telehealth services. HHS believes that many QHP issuers already collect
and maintain information on whether network providers furnish
telehealth services. Approximately half of the parent companies of
issuers on the FFEs also offer Medicare Advantage plans. Since Medicare
Advantage offers a telehealth credit for network adequacy, we expect
those issuers would already have telehealth information available for
their providers. HHS further is of the view that those QHP issuers that
do not currently collect this information may do so using the same
means and methods by which they already collect information from their
network providers relevant to time and distance standards and provider
directory information. For these reasons, HHS estimates that any
additional burden relative to the requirement that QHP issuers report
whether each network provider is furnishing telehealth services would
lead to a minimal increase in burden for many issuers. The requirement
to report whether providers offer telehealth services would account for
four of the total 20 hours we estimate for completing the ECP/NA
template for medical QHPs and 1 of the total 4 hours we estimate for
SADPs. Finally, we estimate it will take 1 hour for issuers, including
both medical QHPs and SADPs, to submit the ECP/NA template and complete
the portions of the Issuer Module that are relevant to these reviews.
We estimate that the total annual burden associated with completing
the additional requirements proposed in this rule within the ECP/NA
template for medical QHPs for up to 215 issuers would be up to 4,300
hours. Assuming the compliance officer average hourly rate of $36.35
per hour, we estimate that the cost of completing the ECP/NA template
for an individual medical QHP could be up to $1,454, and for all 215
issuers, up to $312,610. We estimate that the total annual burden
associated
[[Page 700]]
with this requirement for SADPs for up to 270 issuers would be up to
1,080 hours. Assuming the compliance officer average hourly rate of
$36.35 per hour, we estimate that the cost of completing the ECP/NA
template for an individual SADP could be up to $290.80, and for all 270
issuers, up to $78,516. The total estimated cost for the annual burden
associated with completing the ECP/NA template across both medical QHP
and SADP issuers is $391,126.
HHS is submitting a new information collection package to OMB to
cover data collection related to essential community provider and
network adequacy requirements, which will include the changes proposed
in this proposed rule. This proposed rule serves as the initial notice
for the PRA package. The existing information collection package for
QHP certification (under OMB control number: 0938-1187 (CMS-10433)/
Expiration date: June 30, 2022) includes the data collection and burden
information for the ECP/NA template, outside of what is proposed in
this rule.
K. ICRs Regarding Payment for Cost-Sharing Reductions (Sec. 156.430)
In this rule, HHS is proposing several amendments to Sec. 156.430
to clarify that CSR data submission is mandatory for those issuers that
received CSR payments from HHS for any part of the benefit year, and
voluntary for other issuers. The currently approved burden estimate is
a total cost of $235,683 (2,362.50 hours) across 150 issuers ($1,571.22
per issuer), which accounts for 0.75 hours per issuer to complete and
submit the Issuer Summary Report to HHS each year and 15 hours per
issuer to complete and submit the Standard Methodology Plan and Policy
Report to HHS each year.\379\ We expect that these proposals will
reduce the burden associated with the CSR data submission process when
HHS is not making CSR payments to QHP issuers, as we expect that the
number of issuers submitting CSR data each year will decrease due to
these proposals. We have revised the information collection currently
approved under OMB control number: 0938-1266 (Cost-Sharing Reduction
Reconciliation (CMS-10526)/Expiration date: July 31, 2024) to account
for this decreased burden when HHS is not making CSR payments to QHP
issuers.
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\379\ OMB control number 0938-1266 (Cost-Sharing Reduction
Reconciliation (CMS-10526)/Expiration date: July 31, 2024).
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L. ICRs Regarding Quality Improvement Strategy (Sec. 156.1130)
We are not proposing to amend regulatory text in 45 CFR 156.1130
which outlines QIS standards established in the 2016 Payment Notice.
The information collections associated with QIS data collection and
submission requirements are approved under OMB control number 0938-1286
(Quality Improvement Strategy Implementation Plan and Progress Report
(CMS-10540)/Expiration date: February 25, 2024) and encompasses the
estimated burden and costs associated with a QIS submission that may
include several QIS topic areas. In this proposed rule, we propose that
beginning in 2023, a QHP issuer would be required to address reducing
health and health care disparities as one of their QIS topic areas in
addition to at least one other topic area outlined in section
1311(g)(1) of the ACA, including: Improving health outcomes of plan
enrollees, preventing hospital readmissions, improving patient safety
and reducing medical errors, and promoting wellness and health. We do
not estimate additional burden to be accounted for since the QIS
submission form currently approved under OMB control number: 0938-1286
(Quality Improvement Strategy Implementation Plan and Progress Report
(CMS-10540)/Expiration date: February 25, 2024) already encompasses the
estimated burden and costs associated with a QIS submission that may
include several QIS topic areas.
M. ICRs Regarding Medical Loss Ratio (Sec. Sec. 158.140, 158.150,
158.170)
We propose to amend Sec. 158.140 to clarify that only those
provider incentives and bonuses that are tied to clearly defined,
objectively measurable, and well-documented clinical or quality
improvement standards that apply to providers may be included in
incurred claims for MLR reporting and rebate calculation purposes. We
also propose to amend Sec. 158.150 to specify that only expenditures
directly related to activities that improve health care quality may be
included in QIA expenses for MLR reporting and rebate calculation
purposes. We further propose to make a technical amendment to Sec.
158.170(b) to correct an oversight and remove the reference to the
percentage of premium QIA reporting option described in Sec.
158.221(b)(8), which was deleted in part 2 of the 2022 Payment Notice
final rule. We anticipate that implementing these provisions would
require minor changes to the MLR Annual Reporting Form Instructions,
but would not significantly increase the associated reporting burden.
The burden related to this information collection is currently approved
under OMB control number: 0938-1164 (Medical Loss Ratio Annual Reports,
MLR Notices, and Recordkeeping Requirements (CMS-10418)). The control
number is currently set to expire on July 31, 2024.
O. Summary of Annual Burden Estimates for Proposed Requirements
[[Page 701]]
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[GRAPHIC] [TIFF OMITTED] TP05JA22.039
This proposed rule includes several proposals, including
information collection requests for which we seek to use this
rulemaking as the Federal Register notice through which to receive
comment on their proposed revisions to or submissions of PRA packages.
These proposals include Verification of Eligibility for Special
Enrollment Periods (Sec. 155.420), Data Collection and Corrective
Action Plans related to the SEIPM Program(Sec. 155.1510, 155.1535),
and the proposals on Network Adequacy and Essential Community Providers
(Sec. Sec. 156.230 and 156.235) and the proposal regarding
Differential Display of Standardized Options (Sec. Sec. 155.220) and
156.265).
The following proposals with associated information collection
requests, including the proposal regarding State Flexibility for Risk
Adjustment (Sec. 153.320), the proposal regarding risk adjustment
Distributed Data and Risk Adjustment Data Submission Requirements
(Sec. Sec. 153.610 and 153.710), the proposal on General Program
Integrity and Oversight Requirements (Sec. 155.1200), will be
submitted for PRA approval outside of this rulemaking, through a
separate Federal Register notice.
The proposals for Quality Improvement Strategy (Sec. 156.1130),
Medical Loss Ratio (Sec. Sec. 158.140, 158.150, 158.170), and Payment
for Cost-Sharing Reductions (Sec. 156.430) contain information
collections which are covered by existing PRA packages. One proposal,
the State Selection of EHB-Benchmark Plan for Plan Years Beginning on
or After January 1, 2020 (Sec. 156.111), proposes to discontinue the
associated information collections and remove them from the PRA
package, and the information collection in the Determination of Error
Findings Decision and Appeal Redetermination (Sec. Sec. 155.1525 and
155.1530) proposal is exempt from the PRA.
P. Submission of PRA-Related Comments
We have submitted a copy of this proposed rule to OMB for its
review of the rule's information collection and recordkeeping
requirements. These requirements are not effective until they have been
approved by the OMB.
To obtain copies of the supporting statement and any related forms
for the proposed collections discussed above, please visit CMS's
website at https://www.cms.gov/regulations-and-guidance/legislation/PaperworkReductionActof1995, or call the Reports Clearance Office at
410-786-1326.
We invite public comments on these potential information collection
requirements. If you wish to comment, please submit your comments
electronically as specified in the
[[Page 702]]
ADDRESSES section of this proposed rule and identify the rule (CMS-
9911-P), the ICR's CFR citation, CMS ID number, and OMB control number.
ICR-related comments are due March 7, 2022.
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this proposed
rule, and, when we proceed with a subsequent document, we will respond
to the comments in the preamble to that document.
VI. Regulatory Impact Analysis
A. Statement of Need
This rule proposes standards related to the risk adjustment program
for the 2023 benefit year and beyond, as well as standards for the HHS-
RADV program beginning with the 2021 benefit year. This rule proposes
additional standards related to eligibility redetermination, special
enrollment periods, requirements for agents, brokers, web-brokers, and
issuers assisting consumers with enrollment through Exchanges that use
the Federal platform; state selection of EHB-benchmark plan and annual
reporting of state-required benefits, termination of coverage, the MLR
program, and 2023 FFE and SBE-FP user fees. This rule also proposes to
remove the annual reporting requirement on states to report state-
required benefits to HHS. In addition, it proposes to reinstate
nondiscrimination provisions related to sexual orientation and gender
identity. The rule also proposes to refine the EHB nondiscrimination
framework by including examples of presumptively discriminatory cases.
The rule also proposes to require issuers in FFEs and SBE-FPs to offer
standardized options. This rule proposes to expand QIS standards and
require QHP issuers to address health and health care disparities in
their QIS submissions in addition to at least one other topic area
outlined in section 1311(g)(1) of the ACA. Finally, this proposed rule
would implement the PIIA requirements for State Exchanges.
B. Overall Impact
We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 202 of the Unfunded Mandates Reform Act
of 1995 (March 22, 1995, Pub. L. 104-4) and Executive Order 13132 on
Federalism (August 4, 1999).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulatory impact analysis (RIA) must be prepared for
rules with economically significant effects ($100 million or more in
any one year).
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule:
(1) Having an annual effect on the economy of $100 million or more in
any one year, or adversely and materially affecting a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local or tribal governments or communities
(also referred to as ``economically significant''); (2) creating a
serious inconsistency or otherwise interfering with an action taken or
planned by another agency; (3) materially altering the budgetary
impacts of entitlement grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order. An RIA
must be prepared for major rules with economically significant effects
($100 million or more in any one year), and a ``significant''
regulatory action is subject to review by OMB. HHS has concluded that
this rule is likely to have economic impacts of $100 million or more in
at least 1 year. Based on HHS estimates, OMB's Office of Information
and Regulatory Affairs has determined this rulemaking is ``economically
significant'' as measured by the $100 million threshold. In accordance
with the provisions of Executive Order 12866, this regulation was
reviewed by the Office of Management and Budget.
The provisions in this proposed rule aim to ensure that consumers
continue to have access to affordable coverage and quality health care.
Although there is still some uncertainty regarding the net effect on
premiums, we anticipate that the provisions of this proposed rule would
help further HHS' goal of ensuring that all consumers have access to
quality and affordable health care and are able to make informed
choices. In accordance with Executive Order 12866, HHS believes that
the benefits of this regulatory action justify the costs.
C. Impact Estimates of the Payment Notice Provisions and Accounting
Table
In accordance with OMB Circular A-4, Table 24 depicts an accounting
statement summarizing HHS' assessment of the benefits, costs, and
transfers associated with this regulatory action.
This proposed rule implements standards for programs that will have
numerous effects, including providing consumers with access to
affordable health insurance coverage, reducing the impact of adverse
selection, and stabilizing premiums in the individual and small group
health insurance markets and in an Exchange. We are unable to quantify
all benefits and costs of this proposed rule. The effects in Table 24
reflect qualitative assessment of impacts and estimated direct monetary
costs and transfers resulting from the provisions of this proposed rule
for health insurance issuers and consumers. The annual monetized
transfers described in Table 24 include changes to costs associated
with the risk adjustment user fee paid to HHS by issuers and the
potential increase in rebates from issuers to consumers due to proposed
amendments to MLR requirements.
[[Page 703]]
We are proposing the risk adjustment user fee of $0.22 PMPM for the
2023 benefit year to operate the risk adjustment program on behalf of
states, which we estimate to cost approximately $60 million in benefit
year 2023.\380\ We expect risk adjustment user fee transfers from
issuers to the federal government to remain steady at $60 million, the
same as estimated for the 2022 benefit year; this is included in Table
24.
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\380\ As noted previously in this proposed rule, no state has
elected to operate the risk adjustment program for the 2023 benefit
year; therefore, HHS will operate the program for all 50 states and
the District of Columbia.
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Additionally, for 2023, we are proposing maintaining the FFE and
the SBE-FP user fee rates at current levels, 2.75 and 2.25 percent of
premiums, respectively.
For our proposed implementation of the State Exchange Improper
Payment Measurement program, we estimate record keeping costs for data
collection and corrective action plan development and implementation to
be approximately $3.0 million annually beginning in PY 2023.
BILLING CODE 4120-01-P
[[Page 704]]
[GRAPHIC] [TIFF OMITTED] TP05JA22.040
[[Page 705]]
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\381\ Healthy People 2030 defines health equity as ``the
attainment of the highest level of health for all people.'' https://health.gov/our-work/national-health-initiatives/healthy-people/healthy-people-2030/questions-answers.
[GRAPHIC] [TIFF OMITTED] TP05JA22.041
BILLING CODE 4120-01-C
This RIA expands upon the impact analyses of previous rules and
utilizes the Congressional Budget Office's (CBO) analysis of the ACA's
impact on federal spending, revenue collection, and insurance
enrollment. Table 25 summarizes the effects of the risk adjustment
program on the federal budget from fiscal years 2023 through 2027, with
the additional, societal effects of this proposed rule discussed in
this RIA. We do not expect the
[[Page 706]]
provisions of this proposed rule to significantly alter CBO's estimates
of the budget impact of the premium stabilization programs that are
described in Table 25.
In addition to utilizing CBO projections, HHS conducted an internal
analysis of the effects of its regulations on enrollment and premiums.
Based on these internal analyses, we anticipate that, quantitatively,
the effects of the provisions proposed in this rule are consistent with
our previous estimates in the 2022 Payment Notice for the impacts
associated with the APTCs, the premium stabilization programs, and FFE
(including SBE-FP) user fee requirements.
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\382\ Reinsurance collections ended in FY 2018 and outlays in
subsequent years reflect remaining payments, refunds, and allowable
activities.
[GRAPHIC] [TIFF OMITTED] TP05JA22.042
1. Guaranteed Availability of Coverage (Sec. 147.104(i))
This proposed rule proposes amendments to Sec. 147.104(i), which
would reverse the policy allowing an issuer to attribute a premium
payment made for new coverage to any past-due premiums owed for
coverage from the same issuer or another issuer in the same controlled
group within the prior 12-month period preceding the effective date of
coverage before effectuating enrollment in new coverage. Under current
rules, individuals may have to pay up to 3 months of past-due premiums
plus a binder payment before enrolling in coverage.\383\ CMS lacks
information on the frequency with which consumers miss payments or the
frequency with which binder payments are currently being made, and
seeks data or information related to past-due premiums. CMS is also
interested in learning more about the population and characteristics of
individuals with past-due premiums.
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\383\ Section 156.270(d) requires issuers to observe a 3-
consecutive month grace period before terminating coverage for those
enrollees who upon failing to timely pay their premiums are
receiving APTC. Section 155.430(d)(4) requires that when coverage is
terminated following this grace period, the last day of enrollment
in a QHP through the Exchange is the last day of the first month of
the grace period. Therefore, individuals whose coverage is
terminated at the conclusion of a grace period would owe at most 1
month of premiums, net of any APTC paid on their behalf to the
issuer. Individuals who attempt to enroll in new coverage while in a
grace period (and whose coverage has not yet been terminated) could
owe up to 3 months of premiums, net of any APTC paid on their behalf
to the issuer.
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Individuals often stop making premium payments or forgo health
insurance because they are unable to afford the premium payments. In a
2019 survey, 42 percent of insured adults reported being worried about
paying for their monthly health insurance premium, with 18 percent
being ``very worried'' and 24 percent being ``somewhat worried''.\384\
In addition, 28 percent of insured adults reported having a difficult
time covering the cost of health insurance each month. In 2019, 73.7
percent of uninsured adults pointed to high cost of coverage as the
reason for being uninsured.\385\
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\384\ Kirzinger, Ashley et al., Data Note: Americans' Challenges
with Health Care Costs, KFF, June 11, 2019. https://www.kff.org/health-costs/issue-brief/data-note-americans-challenges-health-care-costs/.
\385\ Tolbert, J. and Orgera, K., Key Facts about the Uninsured
Population, KFF, November 6, 2020. https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/.
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Based on internal analysis, we estimate that approximately 7.8
percent of enrollees in Exchanges using the Federal platform had their
coverage terminated in 2020 for non-payment of premiums. That figure
was 10.7 percent in 2019, 12.4 percent in 2018, and 17.3 percent in
2017.\386\ Among those enrollees who had their coverage terminated in
2019 and lived in an area where their issuer (or a different issuer in
the same controlled group) had plans available the next year, we
estimate that 16.9 percent enrolled with the same issuer (or a
different issuer in the same controlled group) the following year. That
figure was 16.5 percent in 2018 and 16.8 percent in 2017.\387\ For
those enrollees with household incomes below the federal poverty level,
15.3 percent of enrollees who had their coverage terminated in 2019 and
lived in an area where their issuer (or a different issuer in the same
controlled group) was available the next year enrolled with the same
issuer (or a different issuer in the same controlled group) the
following year.\388\ That figure was 13.5 percent in 2018 and 13.2
percent in 2017. Our analysis also suggests that those enrollees with
lower household incomes (specifically, household incomes below the
federal poverty level) were less likely to enroll in coverage from the
same issuer or another issuer in the same controlled group the
following year. In 2017, 2018, and 2019, those enrollees who were less
than 35 years old were also less likely to enroll in coverage from the
same issuer or another issuer in the same controlled group the
following year than those aged 35 to 54.
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\386\ The annual figures presented in this section should not
necessarily be interpreted as trends, as some states moved from
Exchanges using the Federal platform to State Exchanges and the
overall composition of the dataset may have changed.
\387\ As we reported in the April 18, 2017 Federal Register (82
FR 18346), that figure was approximately 16 percent in 2016.
\388\ Of the 936,637 enrollees who had their coverage terminated
in 2019 and lived in an area where their issuer (or a different
issuer in the same controlled group) was available the next year,
24,784 (or 2.6 percent) had incomes below the federal poverty level.
Many, but not all, of these enrollees lived in states that did not
expand Medicaid eligibility following the implementation of the ACA.
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Due to data limitations, we are unable to directly attribute any
changes in enrollment behavior in the Exchanges using the Federal
platform to the interpretation of the guaranteed availability
requirement stated in the Market Stabilization final rule. However,
this proposed rule would
[[Page 707]]
increase access to health insurance coverage for individuals who stop
paying premiums due to reasons such as financial hardship or
affordability and who are currently unable to enroll in coverage
because they cannot afford to pay past-due premiums. This increased
access could lead to better health outcomes, if these individuals are
able to maintain coverage.\389\ This proposed rule would also increase
the ability for enrollees to access coverage with the same issuer in
the next year. This would be of particular benefit to those Exchange
enrollees living in counties with only one or two participating
issuers.\390\ It could also reduce the costs and burden to enrollees
related to searching for a new plan from another issuer when seeking to
enroll in health care coverage. Being able to enroll with the same
issuer would also allow individuals to have access to the same network
of services and providers, which could improve continuity of care.
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\389\ We request comment on whether there would be any impact on
premiums, affordability, and access for the individuals who reliably
pay. We are interested in comments regarding whether issuers who
implemented policies requiring payment of past due premiums prior to
reenrollment experienced declines in administrative costs related to
the collection of past-due premiums.
\390\ According to recent figures from KFF, in 2021, there were
only two issuers participating in the ACA Exchanges in 44 percent of
counties, and there was only one issuer participating in the ACA
Exchanges in 10 percent of counties. Source: McDermott, Daniel and
Cynthia Cox (2020). ``Insurer Participation on the ACA Marketplaces,
2014-2021.'' KFF, November 23. https://www.kff.org/private-insurance/issue-brief/insurer-participation-on-the-aca-marketplaces-2014-2021/; This was noted by Sandy Ahn and JoAnn Volk in their
analysis of the previous interpretation of the guaranteed
availability requirement. Reference: Ahn, Sandy and JoAnn Volk
(2017). ``Relaxing the Affordable Care Act's Guaranteed Issue
Protection: Issues for Consumers and State Options.'' CHIRblog, June
2. https://chirblog.org/relaxing-the-affordable-care-acts-guaranteed-issue-protection-issues-for-consumers-and-state-options/.
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This policy could result in transfers from issuers who would have
been able to recoup unpaid premiums from enrollees to those enrollees
who would now be able to enroll in coverage from the same issuer or
another issuer in the same controlled group without having to pay past-
due premiums. However, we anticipate that these transfers would be
minimal, as issuers are not permitted to waive past-due premiums and
would be expected to pursue other means of collecting them.
We seek comment on the potential costs, benefits, and transfers
associated with this provision.
2. Nondiscrimination Based on Sexual Orientation and Gender Identity
(Sec. Sec. 147.104(e), 155.120(c), 155.220(j), 156.125(b), 156.200(e),
and 156.1230(b)), and EHB Nondiscrimination Policy for Health Plan
Designs (Sec. 156.125)
Many of the entities regulated by Sec. Sec. 147.104(e),
155.120(c), 155.220(j), 156.125(b), 156.200(e), and 156.1230(b) may
have previously incorporated the proposed nondiscrimination protections
related to sexual orientation and gender identity into their operations
in response to the inclusion of these protections in these regulations
prior to the effective date of the June 19, 2020 rulemaking on section
1557 that eliminated the references to these protections from these
regulations. These regulated entities may have incurred any
administrative costs at that time. We do not anticipate coming into
compliance with these proposed changes would substantially impose
administrative costs on any regulated entities that did not
subsequently revise nondiscrimination policies based on the 2020
section 1557 final rule. Although costs may be incurred by any
regulated entities that did subsequently revise nondiscrimination
policies in response to the removal of such protections from the
affected regulations based on the 2020 section 1557 final rule, we
believe such costs are justified in light of the potential significant
benefits the proposed changes could provide to individuals in the
LGBTQI+ community, by ensuring they are not subject to discrimination
on the basis of their sexual orientation or gender identity.
The EHB nondiscrimination policy proposals in this rulemaking will
most likely impact the vast majority of state EHB-benchmark plans. If
the nondiscrimination policy proposals become final, issuers subject to
Sec. 156.125 and states subject to the standards under Sec. 156.125
through the cross-reference at Sec. 156.111(b)(2)(v) will most likely
need to take action to come into compliance with the updated
nondiscrimination policies, and states may choose to provide guidance
to assist issuers in doing so. The actions necessary to come into
compliance with the updated nondiscrimination policies will likely
impact and minimally increase premiums (for example, Colorado 2023 EHB-
benchmark plan \391\ noted a minimal increase to premiums with the
updated benefits). States have the flexibility to design their EHB-
benchmark plans consistent with Sec. 156.111, which provides more
options in plan designs. We note that several states have already used
this flexibility to update their EHB-benchmark plans. CMS provides
states with greater flexibility to select their EHB-benchmark plans by
providing three new options for selection in PY 2020 and beyond,
including: (1) Selecting the EHB-benchmark plan that another state used
for PY 2017, (2) replacing one or more categories of EHBs under its
EHB-benchmark plan used for PY 2017 with the same category or
categories of EHB from the EHB-benchmark plan that another state used
for PY 2017, or (3) otherwise selecting a set of benefits that would
become the state's EHB-benchmark plan. Under each of these three
options, the new EHB-benchmark also must comply with additional
requirements, including scope of benefits requirements, under Sec.
156.111(b).\392\
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\391\ See for example, Colorado 2023 EHB Benchmark Plan
Actuarial Report: Suite of Gender-affirming care benefits to treat
gender dysphoria resulted cost estimate was 0.04% of the total
allowed claims assuming utilization would be for adults. https://www.cms.gov/CCIIO/Resources/Data-Resources/ehb.
\392\ Section 156.111(b). https://www.ecfr.gov/current/title-45/subtitle-A/subchapter-B/part-156.
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We seek comment on the potential costs, benefits, and transfers
associated with this provision.
3. Risk Adjustment (Sec. Sec. 153.320, 153.610, 153.620, 153.700,
153.710, and 153.730)
Beginning with the 2023 benefit year, we propose the following
model specification changes to the HHS risk adjustment models: (1) To
add a two-stage weighted model specification to the adult and child
risk adjustment models, (2) to remove the existing severity illness
factors in the adult models and add interacted HCC counts factors to
the adult and child risk adjustment models, and (3) to revise the
enrollment duration factors for the adult models. By prioritizing
simplicity and limiting the number of changes to the current model
structure, we minimize administrative burden for HHS, and as HHS runs
risk adjustment in all 50 states and the District of Columbia, we do
not expect these policies to place additional burden on state
governments. These proposed model specifications would result in
limited changes to the number and type of risk adjustment model
factors; therefore, we do not expect these changes to impact issuer
burden beyond the current burden for the risk adjustment program.\393\
To
[[Page 708]]
further assist issuers in understanding the potential impact of these
changes on risk adjustment transfers, we released the 2021 RA Technical
Paper and conducted an EDGE transfer simulation that estimated the
impact on risk scores and transfers with and without these proposed
changes using 2020 benefit year risk adjustment data.\394\ Based on
results from this simulation, we estimate the impact of these policies
on risk adjustment transfers to be relatively minor.\395\
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\393\ See current burden estimates in the Supporting Statement
of OMB control number 0938-1155 (Standards Related to Reinsurance,
Risk Corridors, and Risk Adjustment (CMS-10401)), which is currently
being updated. The previous version of the Supporting Statement is
available at https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201712-0938-015.
\394\ See the 2021 HHS-Operated Risk Adjustment Technical Paper
on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf and the HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes: Summary
Results for Transfer Simulations, available at https://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs.
Issuers that participated in the simulation also received detailed
issuer-specific data, including risk score and transfer estimates
for the simulated results.
\395\ We estimate that the impact of the model specification
changes between the proposed and final 2022 benefit year risk
adjustment models in total absolute value change in transfer over
premium is -0.3 in the individual marker and -0.2 in the small group
market.
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Additionally, we propose to recalibrate the HHS risk adjustment
models for the 2023 benefit year using the 2017, 2018, and 2019
enrollee-level EDGE data. We believe that the approach of blending (or
averaging) 3 years of separately solved coefficients will provide
stability within the risk adjustment program and minimize volatility in
changes to risk scores from the 2022 benefit year to the 2023 benefit
year. We also propose to continue applying a market pricing adjustment
to the plan liability associated with Hepatitis C drugs in the risk
adjustment models, consistent with the approach adopted beginning with
the 2020 models. For the 2023 benefit year, we propose to recalibrate
the models using the final, fourth quarter (Q4) RXC mapping document
that was applicable for the 2018 and 2019 benefit year, with the
exception of the 2017 enrollee-level EDGE data year, for which we
propose to use the most recent RXC mapping document that was available
when we first processed the 2017 enrollee-level EDGE data (that is, Q2
2018) for consistency with prior model year recalibrations, as we did
not include RXCs in the adult risk adjustment models until 2018.\396\
For the 2024 benefit year and beyond, we propose to recalibrate the
models using the final, fourth quarter (Q4) RXC mapping document that
was applicable for each benefit year of data that is included in the
current year's model recalibration. We also propose to continue to
apply a pricing adjustment for Hepatitis C drugs for all three model
types (adult, child, and infant), as well as outline our consideration
for targeted removal of the mapping of hydroxychloroquine sulfate to
RXC 09 (Immune Suppressants and Immunomodulators) and the related RXC
09 interactions for the 2018 and 2019 benefit years' enrollee-level
EDGE data used for model recalibration,\397\ as well as our
consideration for the targeted removal of the mapping of
Descovy[supreg] to RXC 01 ((Anti-HIV Agents) from all three benefit
year datasets used for model recalibration. For the 2023 benefit year,
we are proposing to maintain the CSR adjustment factors finalized in
the 2019-2022 Payment Notices. Overall, we do not estimate that these
changes will impact issuer burden beyond the current burden for the
HHS-operated risk adjustment program.
---------------------------------------------------------------------------
\396\ See 81 FR at 94075.
\397\ The same concerns were not present for the 2017 enrollee-
level EDGE data because hydroxychloroquine sulfate was not included
in the RXC crosswalk until 2018.
---------------------------------------------------------------------------
For the 2023 benefit year, HHS will operate a risk adjustment
program in every state and the District of Columbia. As described in
the 2014 Payment Notice, HHS' operation of risk adjustment on behalf of
states is funded through a risk adjustment user fee. For the 2023
benefit year, we propose to use the same methodology that we finalized
in the 2022 Payment Notice to estimate our administrative expenses to
operate the program. Risk adjustment user fee costs for the 2023
benefit year are expected to remain steady from the prior 2022 benefit
year estimates. However, we project a small increase in billable member
months in the individual and small group markets overall in the 2023
benefit year based on the enrollment increases observed in the 2020
benefit year. We estimate that the total cost for HHS to operate the
risk adjustment program on behalf of states for 2023 will be
approximately $60 million, and therefore, the proposed risk adjustment
user fee would be $0.22 PMPM. Because overall risk adjustment costs
estimated for the 2023 benefit year are similar to 2022 costs, we do
not expect the proposed risk adjustment user fee for the 2023 benefit
year to materially impact the transfer amounts collected or paid by
issuers of risk adjustment covered plans.
We also propose to generally repeal the ability for states to
request a reduction in risk adjustment state transfers of up to 50
percent in all state market risk pools beginning with the 2024 benefit
year, with an exception for prior participants. We propose to provide
an exception for states that have previously submitted risk adjustment
state flexibility requests, so only such states may continue to request
this flexibility beginning with the 2024 benefit year. We also propose
to remove as a criterion for state justification and HHS approval of
these requests the demonstration of state-specific factors that warrant
an adjustment to more precisely account for relative risk differences
in the State individual catastrophic, individual non-catastrophic,
small group, or merged market risk pool. As proposed, we would retain
as the sole requirement for state justification and criterion for HHS
approval the demonstration that the requested reduction would have a de
minimis impact on the necessary premium increase to cover the transfers
for issuers that would receive reduced transfer payments beginning with
the 2024 benefit year.
We anticipate that the proposed changes to risk adjustment state
flexibility requests would have a minimal impact on states and other
interested parties. Only one state, Alabama, has requested a reduction
in risk adjustment state transfers since this flexibility was first
made available beginning in the 2020 benefit year, and under this
proposal, Alabama would be considered a prior participant and could
continue to request such reductions. We do not anticipate any new
burden or costs as a result of this policy.
We also propose to collect and extract five new data elements from
issuers' EDGE servers through issuers' Edge Server Enrollment
Submission (ESES) files and risk adjustment recalibration enrollment
files: ZIP code, race, ethnicity, subsidy indicator, and ICHRA
indicator beginning with the 2023 benefit year. In addition, we propose
to begin extracting three data elements issuers already report to their
EDGE servers--plan ID, rating area and subscriber indicator--as part of
the enrollee-level EDGE data beginning with the 2022 benefit year. The
proposal to extract plan ID, rating area, and subscriber indicator will
pose minimal burden on issuers (only the burden associated with running
of a command) since the creation and storage of the extract--which
issuers do not receive--is mainly handled by HHS. For the collection of
the five new data elements we propose to collect and extract beginning
with the 2023 benefit year, the cumulative additional cost estimate is
$225,168 for 600 issuers. We estimate that the addition of these five
new data elements to the risk adjustment data
[[Page 709]]
submission requirements would be $375.28 per issuer. The proposal to
extract these data elements will pose minimal burden on issuers (only
the burden associated with running of a command) since the creation and
storage of the extract--which issuers do not receive--is mainly handled
by HHS. We expect minimal costs to HHS as a result of these proposals.
We also propose to amend Sec. 153.730 to clarify that in
situations where the April 30 deadline for issuers to submit risk
adjustment data to HHS in states where HHS is operating the risk
adjustment program falls on a non-business day, the deadline for
issuers to submit the required data would be the next applicable
business day. We believe this proposal would not pose additional burden
since it does not change any of the data submission requirements and
only clarifies the deadline when April 30 falls on a non-business day.
We seek comment on estimated costs and transfers and potential
benefits associated with these provisions.
4. Risk Adjustment Data Validation (Sec. Sec. 153.350 and 153.630)
In this proposed rule, we propose updates to the HHS-RADV error
rate calculation methodology beginning with the 2021 benefit year to
(1) extend the application of Super HCCs from their current application
only in the sorting step that assigns HCCs to failure rate groups to
broader application throughout the HHS-RADV error rate calculation
processes, (2) specify that Super HCCs will be defined separately
according to the age group model to which an enrollee is subject, and
(3) constrain to zero any negative failure rate outlier in a failure
rate group, regardless of whether the outlier issuer has a negative or
positive error rate. Although we anticipate the proposed changes will
have a small impact on issuers' HHS-RADV risk adjustment transfer
adjustments, risk adjustment is a budget neutral program and we expect
these proposals to refine the HHS-RADV error rate calculation
methodology will not have an impact on the administrative burden to
issuers subject to the current HHS-RADV process because HHS is
responsible for calculating error rates and applying error rates to
adjust risk scores and state market risk pool transfers. Furthermore,
we expect these changes will have minimal impacts on administrative
costs to the federal government as the described changes do not impact
the underlying HHS-RADV data, the amount of data HHS collects, or the
SVA, which is conducted by an entity HHS retains.
We seek comment on these burden estimates.
5. Agents, Brokers, and Web-Brokers (Sec. 155.220)
a. Required QHP Comparative Information on Web-Broker Websites and
Related Disclaimer
We propose to amend Sec. 155.220(c)(3)(i)(A) to include at
proposed new Sec. Sec. 155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(5)
a list of the QHP comparative information web-broker non-Exchange
websites are required to display consistent with Sec. 155.205(b)(1).
We also propose to revise the disclaimer requirement in Sec.
155.220(c)(3)(i)(A) so that web-broker non-Exchange websites would be
required to prominently display a standardized disclaimer provided by
HHS stating that enrollment support is available on the Exchange
website and provide a web link to the Exchange website where enrollment
support for a QHP is not available using the web-broker's non-Exchange
website.
In the preamble of part 2 of the 2022 Payment Notice final rule, we
announced our intention to enforce the requirement that web-brokers
display the QHP comparative information described under Sec.
155.205(b)(1) beginning with the PY 2022 open enrollment period.\398\
Specifically, we propose to create proposed new Sec. Sec.
155.220(c)(3)(i)(A)(1) through (5) to list premium and cost-sharing
information, the summary of benefits and coverage established under
section 2715 of the PHS Act, identification of the metal level of the
QHP as defined by section 1302(d) of the ACA or whether it is a
catastrophic plan as defined by section 1302(e) of the ACA, the results
of the enrollee satisfaction survey as described in section 1311(c)(4)
of the ACA, quality ratings assigned in accordance with section
1311(c)(3) of the ACA, and the provider directory made available to the
Exchange in accordance with Sec. 156.230 as the minimum QHP
comparative information web-broker non-Exchange websites must display
for all available QHPs. Including this information within Sec.
155.220, instead of through a cross-reference to Sec. 155.205(b)(1),
would provide better clarity and ease of reference and establish a list
of required QHP comparative information consistent with our current
enforcement approach, which, as discussed above, does not require the
display of MLR information and transparency of coverage measures.
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\398\ See Patient Protection and Affordable Care Act; HHS Notice
of Benefit and Payment Parameters for 2022 and Pharmacy Benefit
Manager Standards; Final Rule, 86 FR 24140 at 24206 (May 5, 2021).
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We propose to revise Sec. 155.220(c)(3)(i)(A) to state that web-
broker websites must disclose and display the following QHP information
provided by the Exchange or directly by QHP issuers consistent with the
requirements of Sec. 155.205(c), and to the extent that enrollment
support for a QHP is not available using the web-broker's website,
prominently display a standardized disclaimer provided by HHS stating
that enrollment support for the QHP is available on the Exchange
website, and provide a web link to the Exchange website.
These proposals should result in very limited new burden for web-
brokers. As we explained in Section III of the preamble, given CMS's
current enforcement policies relative to these requirements, the QHP
comparative information we propose to require web-broker websites to
display is consistent with current requirements. As a result, this
proposed requirement would not present new burden to web-brokers.
The proposed new disclaimer would require web-brokers to make minor
updates to their websites in cases when they do not support enrollment
in all available QHPs. However, in those cases, they would be
displaying a standardized disclaimer much like the plan detail
disclaimer that they have historically been required to display.
We estimate this proposal will affect approximately 20 web-brokers.
Given the minor modifications necessary to implement the revised
disclaimer in this proposal, we estimate a cost of $411 in total labor
costs for each web-broker, which reflects 5 hours of work by Web
Developers and Digital Interface Designers (15-1257) per web-broker
(100 hours across all web-brokers annually) at an average hourly rate
of $82.20. The cumulative additional cost estimate as a result of this
proposal is $8,220 for 20 web-brokers in the 2022 benefit year.
We seek comment on the estimated burden associated with these
proposals.
b. Prohibition of QHP Advertising on Web-Broker Websites
Section 155.220(c)(3)(i)(L) prohibits web-broker non-Exchange
websites from displaying QHP recommendations based on compensation an
agent, broker, or web-broker receives from QHP issuers. We propose to
amend Sec. 155.220(c)(3)(i)(L) to make clear that web-broker non-
Exchange websites are also prohibited from displaying QHP
advertisements, or otherwise providing
[[Page 710]]
favored or preferred placement in the display of QHPs, based on
compensation agents, brokers, or web-brokers receive from QHP issuers.
This proposal should impose no new costs on web-brokers so long as
they are not displaying QHP advertisements on their websites. We
believe that very few web-brokers are currently doing so. However, for
those few web-brokers that are displaying QHP advertisements on their
websites, they would be required to update their websites to remove
those advertisements and would lose any advertising revenue associated
with such placements. Since advertisements on websites are inherently
subject to change, even for those web-brokers that would be required to
make updates to their websites if this proposal is finalized, the costs
may be very limited, although we request comment on this assumption and
acknowledge that there may be loss of advertising revenue. We also
realize, to the extent advertising revenue is lost, web-brokers may
seek to recoup the lost revenue from other sources resulting in a
transfer of costs. For example, web-brokers may seek to increase fees
received from agents and brokers using their websites or may pursue
increased commissions from QHP issuers.
We seek comment on the potential costs, benefits, and transfers
associated with this proposal.
c. Explanation of Rationale for QHP Recommendations on Web-Broker
Websites
We propose to amend Sec. 155.220 to add a proposed new paragraph
(c)(3)(i)(M) that would require web-broker websites to prominently
display a clear explanation of the rationale for explicit QHP
recommendations and the methodology for the default display of QHPs on
their websites (for example, alphabetically based on plan name, from
lowest to highest premium, etc.). We believe this proposed new
requirement would provide consumers with a better understanding of the
information being presented to them on web-broker websites, thereby
enabling them to make better informed decisions and shop for and select
QHPs that best fit their needs.
We support web-broker websites' use of innovative decision-support
tools for consumers to help them shop for and select QHPs that best fit
their needs. However, web-broker websites that explicitly recommend or
rank QHPs do not always provide an explanation for their
recommendations or rankings. Similarly, web-broker websites may not
include an explanation of the methodology used for their default
displays of QHPs, and it may not otherwise be apparent what
methodologies are used. The absence of such explanations may cause some
consumers to misunderstand the bases for the recommendations displayed
to them on web-broker websites (whether explicit or implicit), or may
prevent them from assessing the value of the recommendations (for
example, whether a recommendation is based on the factors most
important to them). In addition, the lack of explanations for QHP
recommendations on web-broker websites may obscure that the web-broker
is recommending QHPs based on compensation the web-broker receives from
QHP issuers in violation of Sec. 155.220(c)(3)(i)(L). For these
reasons, we propose to amend Sec. 155.220 to add proposed new
paragraph (c)(3)(i)(M) that would require web-broker websites to
prominently display a clear explanation of the rationale for QHP
recommendations and the methodology for its default display of QHPs.
This proposal should result in very limited new costs for web-
brokers, since the information it would require they display on their
websites would only require text-based changes that are relatively easy
to implement. Furthermore, the extent of those textual updates should
be relatively minor in most cases. For example, if a web-broker is
recommending a QHP based on the fact that it has the lowest monthly
premiums for a consumer, that can likely be communicated in one or two
sentences of informational text, or possibly even in a single phrase or
set of short bullet points. Some web-brokers are already providing the
information that would be required by this proposal, and therefore
would not have to make any website updates. Other web-broker websites
do not explicitly recommend QHPs, and therefore the impact of this
proposal would be limited to providing similar information about the
methodology for their default display of QHPs (for example, explaining
QHPs are sorted from lowest to highest premium, etc.), assuming they do
not already provide that information.
We estimate this proposal will affect approximately 20 web-brokers.
Given the minor text-based changes necessary to implement the
informational text detailing the rationale for QHP recommendations and
the methodology for a default display of QHPs, we estimate a cost of
$411 in total labor costs for each web-broker, which reflects 5 hours
of work by Web Developers and Digital Interface Designers (15-1257) per
web-broker (100 hours across all web-brokers annually) at an average
hourly rate of $82.20. The cumulative additional cost estimate as a
result of this proposal is $8,220 for 20 web-brokers in the 2022
benefit year.
We seek comment on the potential costs and benefits associated with
this proposal.
d. Providing Correct Information to the FFEs and Prohibited Business
Practices
These proposed revisions to Sec. 155.220(j)(2) are focused on
addressing various areas where HHS has thus far identified a need for
more direct and clear guidance, including ensuring that correct
consumer information is entered onto Exchange applications. This
includes contact information, such as the consumer's email address,
telephone number, and mailing address, as well as information related
to projected consumer household income. They also set forth prohibited
business practices, such as using automation when interacting with CMS
Systems or the DE Pathways without CMS' advance written approval and
failing to properly identity proof Exchange applicants. These proposed
changes will clarify HHS' expectations in these areas, and create
clear, enforceable standards and bases for taking enforcement action
for violations of these requirements.
HHS believes these proposals would not impose any burden on any of
the parties the proposals would impact, including agents, brokers, and
web-brokers. None of these proposals propose to impose new
requirements. Rather, these proposals are intended to address common
problems that HHS has observed, and provide clear, enforceable
standards intended to protect consumers and support the efficient
operation of Exchanges by substantially reducing the occurrence of
those problems.
We seek comment on any potential costs or benefits associated with
these proposals.
6. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. 155.320)
We propose to amend Sec. 155.320(d)(4) to remove the requirement
that Exchanges that do not reasonably expect to obtain sufficient
verification data related to enrollment in or eligibility for employer
sponsored coverage conduct random sampling to verify whether an
applicant is eligible for or enrolled in an eligible employer sponsored
plan in favor of a verification process that is based on risk for
inappropriate APTC/CSRs. We believe this proposal would benefit
employers, employees, Exchanges using the Federal platform, and State
Exchanges that operate their own eligibility and enrollment platform,
[[Page 711]]
as this proposal would relieve them from the burden of investing
resources to conduct and respond to random sampling, as applicable.
In the 2019 Payment Notice final rule, we discussed a study that
HHS conducted in 2016 and the burden associated with sampling based in
part on the alternative process used for the Exchanges.\399\ HHS
incurred approximately $750,000 in costs to design and operationalize
this study, and the study indicated that $353,581 of APTC was
potentially incorrectly granted to individuals in the sampled
population who inaccurately attested to their enrollment in or
eligibility for a qualifying eligible employer sponsored plan. We
placed calls to employers to verify 15,125 cases but were only able to
verify 1,948 cases. A large number of employers either could not be
reached or were unable to verify a consumer's information, resulting in
a verification rate of approximately 13 percent. The sample size
involved in the 2016 study did not represent a random sample of the
target population and did not fulfill all regulatory requirements for
sampling under Sec. 155.320(d)(4)(i).
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\399\ See https://www.govinfo.gov/content/pkg/FR-2017-11-02/pdf/2017-23599.pdf, p. 51128.
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Taking additional costs into account--namely, the cost of sending
notices to employees as required under Sec. 155.320(d)(4)(i)(A), the
cost of building the infrastructure and implementing the first year of
operationalizing this process, and the cost of expanding the number of
cases to a random sample size of approximately 1 million cases--we
estimate that the overall one-time cost of implementing sampling would
have been approximately $8 million for the Exchanges using the Federal
platform, and between $2 million and $7 million for other Exchanges,
depending on their enrollment volume and existing infrastructure.
Therefore, we estimate that the average per-Exchange cost of
implementing sampling that resembles the approach taken by the
Exchanges using the Federal platform would have been approximately $4.5
million for State Exchanges that operate their own eligibility and
enrollment platform, for a total cost of $67.5 million for the 15 State
Exchanges that operate their own eligibility and enrollment platform
(operating in 14 states and the District of Columbia). However, we are
aware that 4 State Exchanges that operate their own eligibility and
enrollment platform have already incurred costs to implement sampling
and estimate that they have incurred one-time costs of approximately
$4.5 million per Exchange with a total of $18 million and will only
experience savings related to recurring costs. Therefore, the one-time
savings for Exchanges using the Federal platform and the remaining
State Exchanges that operate their own eligibility and enrollment
platform will be approximately $49.5 million.
We estimate the annual costs to conduct sampling on a random sample
size of approximately 1 million cases to be approximately $8 million
for the Exchanges using the Federal platform and $7 million on average
for each State Exchange that operates its own eligibility and
enrollment platform. This estimate includes operational activities such
as noticing, inbound and outbound calls to the Marketplace call center,
and adjudicating consumer appeals. The total annual cost to conduct
sampling would have been $105 million for 15 State Exchanges.
Therefore, the total annual cost for the Exchanges using the Federal
platform and the 15 State Exchanges that operate their own eligibility
and enrollment platform would have been $113 million in 2022 and
onward.
Eliminating these estimated costs would be offset by the costs of
designing and implementing an appropriate verification process. We
estimate that the cost to conduct research for Exchanges using the
Federal platform to be approximately $295,000 and for the 15 State
Exchanges that operate their own eligibility and enrollment platform to
be approximately $4.4 million. In addition to significant cost savings,
this proposal would provide more flexibility for states to design and
implement a verification process for employer sponsored coverage that
is tailored to their unique populations, and would protect the
integrity of states' respective individual markets. Furthermore, we
believe that this proposal would reduce burden on employers and
employees, as compliance with the current random sampling,
notification, and information gathering processes require significant
time and resources, which likely would be reduced if this proposal is
finalized.
HHS requests comment on the estimated and potential costs and
impacts of this proposal.
7. Proration of Advance Premium Tax Credit and Premium (Sec. Sec.
155.240(e), 155.305(f)(5), and 155.340)
HHS is proposing amendments to part 155, specifically at Sec. Sec.
155.240(e), 155.305(f)(5), and 155.340 to establish the requirement
that all Exchanges prorate both premiums and APTCs for enrollees
enrolled in a particular policy for less than the full coverage month,
including when the enrollee is enrolled in multiple policies within a
month, each lasting less than the full coverage month using a specified
methodology. In line with calculating PTC according to the provisions
at 26 CFR 1.36B-3, this method of administering APTC would reduce
instances of payments of APTC in excess of an applicable taxpayer's
monthly PTC for a month in which an enrollee is enrolled for less than
a full calendar month and thus would protect the applicable taxpayer
from incurring income tax liability due to excess APTC.
This would benefit both issuers and enrollees by preventing APTC
overpayment and eliminating wasted resources dedicated to resolving
overpayment issues. While the FFEs and SBE-FPs already prorate APTC and
premium amounts, State Exchanges do not currently prorate consistently
the amount of applied APTC administered to issuers in their applicable
states.
HHS acknowledges that those State Exchanges that do not currently
prorate APTC or premium amounts will be financially impacted by the
proposed requirement to implement this methodology, and this proposal
will likely require operational systems builds to support this new
proration requirement.
Based on historical cost data for SBEs to implement changes to
their IT systems and operations related to premium processing
functionality and similar functionality, such as functionality for
processing consumer failures to reconcile APTC received for a previous
plan year, HHS estimates that State Exchanges that currently do not
implement proration of APTC or premium amounts according to the
proposed methodology could expect to incur one-time implementation
costs. HHS anticipates that each affected State Based Exchange that
does not already prorate APTC or premium amounts according to the
proposed methodology would expect an estimated $1 million one-time
burden to account for the IT build to support the new calculation and
reporting systems associated with this requirement.
HHS estimates that 8 State Exchanges currently prorate premium
amounts but do not prorate APTC amounts. HHS anticipates that those
State Exchanges which already prorate premium amounts will have the
operational and systems capacity to calculate the prorated premium and
APTC amounts as required in this proposed policy.
Currently, State Exchanges vary in their approaches to implementing
the proposed APTC and premium proration. In order to provide the most
conservative estimate of this proposal's
[[Page 712]]
burden, HHS assumes that 10 State Exchanges, including State Exchanges
that newly transitioned to being State Exchanges by the time of this
rulemaking, will incur the highest level of implementation cost
detailed earlier in this proposed rule ($1 million in one-time
implementation burden per State Exchange) for a total estimated impact
of $10,000,000 in the 2024 benefit year across all State Exchanges. HHS
seeks comment on the estimated costs and benefits described in this
section.
10. Special Enrollment Periods--Special Enrollment Period Verification
(Sec. 155.420)
We are proposing to amend Sec. 155.420 to add new paragraph (g) to
state that Exchanges may conduct pre-enrollment verification of
eligibility for special enrollment periods, at the option of the
Exchange, and that Exchanges may provide an exception to pre-enrollment
special enrollment period verification for special circumstances.
Exchanges on the Federal platform would conduct pre-enrollment special
enrollment period eligibility verification for new consumers who attest
to losing minimum essential coverage.
We do not anticipate that revisions to Sec. 155.420 would impose
regulatory burden or costs on the Exchanges on the Federal platform
because these Exchanges will decrease the number of special enrollment
period types that require pre-enrollment verification to only include
special enrollment periods for new consumers who attest to losing
minimum essential coverage. The provisions proposed in this rule would
decrease the scope of pre-enrollment special enrollment period
verification in all states with Exchanges served by the Federal
platform. We anticipate that this would result in 194,000 fewer
individuals having their enrollment delayed or ``pended'' annually
until eligibility verification is completed, which would result in a
$5,150,700 decrease in annual ongoing costs to the federal government.
There may be State Exchanges that also decide to reduce the scope
of their current pre-enrollment special enrollment period verification,
which would also decrease annual ongoing costs for State Exchanges.
State Exchanges that are currently conducting pre-enrollment
verification of eligibility for more special enrollment period types
than those that the Exchanges on the Federal platform would be
verifying under this proposal could experience a decrease in burden and
costs if they choose to align their approaches with the Exchanges on
the Federal platform. State Exchanges that are currently conducting
pre-enrollment verification of eligibility for fewer types of special
enrollment periods than the proposed special enrollment period that the
Exchanges on the Federal platform would be verifying under this
proposal could experience an increase in burden and costs if they
choose to align with the Exchanges on the Federal platform, but State
Exchanges will not be required to align with the Exchanges on the
Federal platform.
We do not anticipate that this would increase administrative costs
on QHP issuers. Additionally, our data suggests that SEP documentation
deters younger, likely healthier individuals from enrolling, but there
could be an increase in claims costs to QHP issuers since the Exchanges
on the Federal platform will be requiring document submission prior to
enrollment for fewer special enrollment period types.
We seek comment on the potential costs, benefits, and transfers
associated with this proposal.
11. General Program Integrity and Oversight Requirements (Sec.
155.1200)
We propose to add new Sec. 155.1200(e) to permit a State Exchange
to meet the requirement to conduct an annual independent external
programmatic audit, as described at Sec. 155.1200(c), by completing
the annual, required SEIPM program process. As a result, we estimate
that there would be a general reduction in reporting and contracting
costs to State Exchanges related to meeting auditing requirements under
Sec. 155.1200. We anticipate the combined cost in contracting and
reporting would result in an average annual reduction of approximately
$90,624.62 for each State Exchange beginning in benefit year 2024. The
total cost annual reduction across 18 State Exchanges would be
approximately $1,631,243.16. Any new costs, burdens, and benefits to
State Exchanges of meeting requirements for the SEIPM program are
described later in this proposed rule.
We seek comment on the potential costs, benefits, and transfers
associated with this provision.
12. State Exchange Improper Payment Measurement Program (Sec. Sec.
155.1500 Through 155.1540)
The implementation of the SEIPM program could have the direct
effect of reducing improper payments. Measuring the error rate of State
Exchange Premium Tax Credit payments will reveal vulnerable processes
to be corrected. Recordkeeping costs of $3.0 million annually will
begin in 2023.
We seek comment on the estimated costs and benefits and potential
transfers associated with this provision.
13. FFE and SBE-FP User Fees (Sec. 156.50)
We are proposing an FFE user fee rate of 2.75 percent of monthly
premiums for the 2023 benefit year, which is the same as the 2.75
percent FFE user fee rate finalized in part 3 of the 2022 Payment
Notice.\400\ We also propose an SBE-FP user fee rate of 2.25 percent
for the 2023 benefit year, which is the same as the 2.25 percent SBE-FP
user fee rate finalized in part 3 of the 2022 Payment Notice.
Therefore, we do not believe that these proposed user fee rates will
have any additional impact on premiums compared to the 2022 benefit
year. We also propose to amend Sec. 156.50 to conform the user fee
regulations with the repeal of the Exchange DE option finalized in part
3 of the 2022 Payment Notice.\401\ As this proposal does not alter
existing policy, we do not expect that it will have any additional
regulatory impact.
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\400\ 86 FR 53412 at 53445.
\401\ 86 FR 53412.
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We seek comment on the potential costs, benefits, and transfers
associated with this provision.
14. State Selection of EHB-Benchmark Plan for Plan Years Beginning on
or After January 1, 2020 (Sec. 156.111)
We are proposing to eliminate the requirement at Sec. 156.111(d)
and (f) to require states to annually notify HHS in a form and manner
specified by HHS, and by a date determined by HHS, of any state-
required benefits applicable to QHPs in the individual or small group
market that are considered to be in addition to EHB in accordance with
Sec. 155.170(a)(3) and any benefits the state has identified as not in
addition to EHB and not subject to defrayal, describing the basis for
the state's determination.
Under this proposal, states would no longer be required to submit
an annual report that complies with each requirement listed at Sec.
156.111(f)(1) through (6), nor would HHS identify which benefits are in
addition to EHB for the applicable PY in the state if a state does not
submit an annual reporting package.
The 2021 Payment Notice acknowledged that requiring states to
annually report to HHS would require that states submit additional
paperwork to HHS on an annual basis but noted that, as states are
already required under Sec. 155.170 to identify which state-required
benefits are in addition to EHB and to defray the cost of those
benefits,
[[Page 713]]
any such burden experienced by states would be minimal.\402\ The 2021
Payment Notice also stated that this reporting requirement would be
complementary to the process the state should already have in place for
tracking and analyzing state-required benefits. The 2021 Payment Notice
further explained that states may opt not to report this information
and instead let HHS make this determination for them. In the 2021
Payment Notice, we also discussed that any state burden associated with
this policy would be limited to the completion of the HHS templates,
validation of that information, and submission of the templates to HHS.
Repealing the annual reporting requirement would remove the burden
associated with that policy, detailed in 2021 Payment Notice and
summarized previously in the Collection of Information Requirements
section in this proposed rule.
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\402\ 85 FR 29164, 29252.
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Although this proposal would relieve states of the annual reporting
requirements and any associated burden with submission and validation
of the information on the annual reporting templates, it would not pend
or otherwise impact the defrayal requirements under section
1311(d)(3)(B) of the ACA, as implemented at Sec. 155.170. Under this
proposal, states remain responsible for making payments to defray the
cost of additional required benefits and issuers are still responsible
for quantifying the cost of these benefits and reporting the cost to
the state. We also note that the obligation for a state to defray the
cost of QHP coverage of state-required benefits in addition to EHB is
an independent statutory requirement from the annual reporting policy
finalized at Sec. 156.111(d) and (f).
We seek comment on the potential costs, benefits, and transfers
associated with this provision.
15. Levels of Coverage (Actuarial Value) (Sec. 156.140, 156.200,
156.400)
We are proposing to change the de minimis range for levels of
coverage at Sec. 156.140(c) to a variation of +2/-2 percentage points
for all standard bronze plans, gold plans, platinum plans, individual
market off-Exchange silver plans, and all small group market silver
plans (on- and off-Exchange), as well as proposing to change the de
minimis for expanded bronze plans to +5/-2, that are required to comply
with AV standards for PYs beginning in 2023. In addition, we are
proposing to change the de minimis under Sec. 156.200 to +2/0
percentage points for individual market silver QHPs and for the income-
based silver CSR plan variations under Sec. 156.400 to +1/0.
In the 2017 Market Stabilization rule,\403\ we acknowledged that in
the short run, expanding the standard de minimis range to +2/-4 would
generate a transfer of costs from consumers to issuers in the form of
decreased APTC and increased premiums, but stated our belief that the
additional flexibility for issuers would have positive effects for
consumers over the longer term as premiums stabilized, issuer
participation increased, and coverage options at the silver level and
above increased, which would attract more young and healthy enrollees
into such plans. As discussed above, since we finalized the expanded de
minimis ranges, we have observed decreased enrollment in silver plans
(from 963,241 enrollees in PY 2018 to 424,345 enrollees in PY 2021),
despite the number of standard silver plans available on HealthCare.gov
steadily increasing from 811 silver plans in PY 2018 to 1,386 silver
plans in PY 2021. Thus, we cannot justify the decreased APTC with
evidence of increased enrollment of younger and healthier enrollees in
silver plans.
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\403\ Patient Protection and Affordable Care Act; Market
Stabilization, 82 FR 18346 (April 18, 2017). Available at https://www.govinfo.gov/content/pkg/FR-2017-04-18/pdf/2017-07712.pdf.
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Changing the de minimis ranges for standard metal level plans would
generate a transfer of costs from the government and issuers to
consumers in the form of increased APTC and decreased premiums, because
narrowing the de minimis range for silver plans can affect the
generosity of the SLCSP. The SLCSP is the benchmark plan used to
determine an individual's PTC. A subsidized enrollee in any county that
has a SLCSP that is currently below 70 percent AV would see the
generosity of their current SLCSP increase, resulting in an increase in
PTC. Not all counties would see the SLCSP change as a result of this
proposal. In states using HealthCare.gov, approximately 87 percent of
counties across 23 states have a SLCSP that is below 70 percent AV.
For this proposal, the CMS Office of the Actuary estimates a
nationwide increase in PTCs through PY 2032, as shown in Table 26:
[GRAPHIC] [TIFF OMITTED] TP05JA22.043
This proposal would impact those consumers currently enrolled in
standard silver plans that are currently in the -4 to -0.01 percent de
minimis range that would be out of compliance under this proposal, as
well as consumers currently enrolled in individual market silver QHPs
that are currently in the -4 to -0.01 percent de minimis range and
associated income-based CSR silver plan variations currently enrolled
in the -1 to -0.01 percent de minimis range. Of the plans on
HealthCare.gov, we estimate that there are approximately 150,000
enrollees in gold plans below 78 percent AV, and 3,500 enrollees in
platinum plans below 88 percent AV.\404\ Additionally, we estimate
there are approximately 248,000 enrollees in HealthCare.gov silver QHPs
below 70 percent AV, with approximately 4.2 million enrollees in
corresponding income-based CSR plan variations. Under these proposals,
those enrollees would need to select a different plan for PY 2023 if
the issuer chooses to discontinue the plan rather than revise the
plan's cost sharing. Additionally, these proposals would similarly
affect enrollees in such plans that are not available on
HealthCare.gov, such as plans sold on state Exchanges, for which
[[Page 714]]
we do not have data to make an informed estimate.
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\404\ There are no enrollees in bronze plans below 58% AV.
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We estimate the premiums for these plans would increase
approximately 2 percent on average because of benefit changes required
for plans to meet a +2/0 de minimis threshold. However, for Exchange
enrollees, we expect this premium increase to be substantially offset
by the corresponding increase in PTC because of the proposal's impact
on the SLCSP. Similarly, the proposal to change the de minimis range
for CSR variants to +1/0 would lead to improved cost-sharing due to the
higher relative AV compared to the current +1/-1 range, along with
increased gross premiums that would be substantially offset by
increased PTC payments. After implementation of the ARP enhanced
financial subsidies, subsidized enrollees make up the majority of
HealthCare.gov silver QHP enrollees--only 91,000 of approximately
248,000 individual market silver QHP enrollees in plans with AV between
66.00 and 69.99 percent plan AV remain unsubsidized. By comparison,
enrollment within the corresponding income-based silver CSR variations
of the above silver QHPs has increased to approximately 4.2 million. We
expect the increased PTC payments due to the premium increase to
incentivize healthier subsidy-eligible enrollees to participate in the
Marketplace, and that the improved risk pool as a result of increased
healthier enrollees would mitigate the net cost burden of covering a
decreasing population of unsubsidized enrollees.
In addition, changing the de minimis range for standard silver
plans would impact ICHRAs, which use the Lowest Cost Silver Plan (LCSP)
as the benchmark to determine whether an ICHRA is considered affordable
to an employee. Under this proposal, as silver plans become more
generous and premiums increase, an employer would have to contribute
more to an ICHRA to have it be considered affordable. This change could
discourage large employer use of ICHRAs because large employers need to
offer affordable coverage to satisfy the employer shared responsibility
provisions.\405\ Additionally, if coverage is considered unaffordable
to the employee, the employee can opt out of the ICHRA and instead
purchase coverage on the Exchange with APTC, if otherwise eligible; and
increasing the LCSP premiums could make employer-sponsored coverage
unaffordable to more employees. We estimate silver plans with an AV
below 70 percent will see premiums increase approximately 2 percent on
average due to more generous benefits. We do not believe this will have
a significant impact on the number of employers willing to offer ICHRAs
or whether an ICHRA is considered affordable to most employees, but
invite comment to refute or refine this understanding on these issues
in particular.
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\405\ See section 4980H of the Code; 26 CFR 54.4980H-1--26 CFR
54.4980H-6.
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We seek comment on the estimated costs, benefits, and transfers
associated with this provision.
16. Standardized Options (Sec. 156.201)
Section 156.201 would require QHP issuers to offer standardized QHP
options. Though these proposed requirements would necessitate the
creation of new plans, HHS believes the burden imposed on issuers would
be minimal because these new plans' benefits, networks, and formularies
would not differ substantially from the benefits, networks, and
formularies of plans that issuers currently offer and because HHS is
specifying the cost sharing parameters, MOOPs, and deductibles for
these new plans. Additionally, HHS would design these standardized
options to resemble the most popular QHPs in the individual market FFEs
and SBE-FPs in PY 2021, making these standardized options comparable to
plans that the majority of issuers already offer. Furthermore, since
HHS proposes to require QHP issuers to offer standardized options at
every product network type, metal level, and throughout every service
area that they also offer non-standardized QHPs (but not at different
product network types, metal levels, and service areas that they do not
also offer non-standardized QHPs), issuers would not be required to
extend plan offerings beyond their existing service areas.
Additionally, since HHS does not propose to limit the number of
non-standardized QHP options that issuers can offer in PY 2023, HHS
believes the majority of enrollees will remain enrolled in their
current non-standardized options. Moreover, since HHS does not propose
to require issuers to offer a higher number of QHPs than what they
currently offer, issuers would still be able to determine how many QHPs
they wish to offer. As a result, HHS does not expect the total number
of plans that issuers will offer to change substantially subsequent to
the imposition of requirement. Thus, though these new plans would have
to be submitted for approval, certification, and display, we expect
that the overall burden for issuers and states alike would not
substantially increase because we do not expect the number of overall
plan offerings to substantially increase--due in part to issuers
discontinuing some old plans.
As noted earlier in the preamble, HHS is considering resuming the
differential display of standardized options per the existing authority
at Sec. 155.205(b)(1). HHS would assume burden for the differential
display of standardized options on HealthCare.gov, meaning FFE and SBE-
FP issuers would not be subject to this burden. In addition, as noted
above in the preamble, HHS is considering resuming enforcement of the
standardized options display requirements for approved web-brokers and
QHP issuers using a direct enrollment pathway to facilitate enrollment
through an FFE or SBE-FP--including both the Classic DE and EDE
Pathways--at Sec. Sec. 155.220(c)(3)(i)(H) and 156.265(b)(3)(iv),
respectively.
HHS believes that resuming enforcement of these differential
display requirements will not require significant modification of these
entities' platforms and non-Exchange websites. Further, since HHS would
continue to allow these entities to submit requests to deviate from the
manner in which standardized options are differentially displayed on
HealthCare.gov, potential burden for these for these entities would be
further reduced. HHS also intends to provide access to information on
standardized options to web-brokers through the Health Insurance
Marketplace PUFs and QHP Landscape file to further minimize burden. The
specific burden estimates for these requirements can be found in the
corresponding ICR sections for Sec. Sec. 155.220 and 156.265.
We seek comment on the potential costs, benefits, and transfers
associated with this provision.
17. Network Adequacy (Sec. 156.230)
Section 156.230(a)(2) currently requires a QHP issuer to maintain a
network that is sufficient in number and types of providers, including
providers that specialize in mental health and substance use disorders,
to ensure that all services will be accessible without unreasonable
delay. In this proposed rule, HHS proposes for PY 2023 and future PYs
that all QHPs or QHP candidates that use a provider network must comply
with network adequacy standards.
HHS proposes to conduct prospective quantitative network adequacy
reviews for all FFEs in all FFE states except in states performing plan
management functions that adhere to a standard as stringent as the
federal standard, conduct reviews prospectively, and choose to conduct
their own reviews.
[[Page 715]]
HHS proposes for PY 2023 and future PYs to adopt time and distance
standards to assess whether FFE QHPs or QHP candidates fulfill network
standards based on numbers and types of providers and providers'
geographic locations. Time and distance standards would be calculated
at the county level using information from the ECP/NA template. HHS
also proposes to adopt appointment wait time standards to assess
whether FFE QHPs or QHP candidates fulfill network adequacy standards.
For PY 2023, issuers would attest to meeting the appointment wait time
standards. Issuers that are unable to meet the specified standards for
time and distance or appointment wait times must submit a justification
to account for such variances.
HHS proposes that, for plans that use tiered networks to count
toward the issuer's satisfaction of the network adequacy standards,
providers must be contracted within the network tier that results in
the lowest cost-sharing obligation. For plans with two network tiers
(for example, participating providers and preferred providers), such as
many PPOs, where cost sharing is lower for preferred providers, only
preferred providers would be counted towards network adequacy
standards.
Finally, HHS proposes to collect information about providers who
offer telehealth services via the ECP/NA template to inform network
adequacy and provider access standards for future PYs. As discussed
previously in the Collection of Information Requirements section, this
may increase related administrative costs for issuers who do not
already possess this data, though many issuers already collect and
submit this information for network adequacy submissions in other
markets. While we anticipate that increased burden related to
telehealth data collection would be minimal for many issuers, the
increased burden could ultimately lead to an increase in premiums for
consumers. As noted previously, we believe that the potential benefits
of obtaining telehealth information and using it to inform future
network adequacy standards are in the best interests of both QHP
enrollees and QHP issuers. As such, we anticipate that the additional
burden would be mitigated by the expected benefits.
We seek comment on the potential costs, benefits, and transfers
associated with this provision.
18. Essential Community Providers (Sec. 156.235)
Section 156.235(a)(2)(i) provides that a plan has a sufficient
number and geographic distribution of ECPs if the issuer demonstrates,
among other things, that a QHP or QHP candidate provides access to a
network of providers that includes at least a minimum percentage of
ECPs, as specified by HHS.
For PY 2023 and future PYs, HHS proposes to raise the ECP threshold
applicable to QHPs and QHP candidates from 20 percent to 35 percent.
For this increased threshold, HHS would consider issuers to have
satisfied the regulatory threshold requirement if the issuer contracts
with at least 35 percent of available ECPs in each plan's service area
to participate in the plan's provider network.
We note that in PYs 2015-2017, all FFE QHP issuers satisfied the 30
percent threshold with minimal reliance on ECP write-ins and
justifications. In PYs 2018 through 2021, when the ECP threshold was 20
percent, all QHP issuers satisfied the lower threshold with ease and
very little reliance on ECP write-ins and justifications.
Consequently, HHS anticipates that issuers can meet the proposed 35
percent threshold using ECP write-ins and justifications as needed. We
believe that increasing the ECP threshold would lead to greater ECP
access for low-income and medically underserved individuals. HHS
anticipates that costs may not increase since HHS' data analysis shows
most issuers could easily meet this standard or use the justification
process. HHS expects that administrative cost changes would likely be
minimal for most issuers.
HHS proposes that, for plans that use tiered networks to count
toward the issuer's satisfaction of ECP standards, providers must be
contracted within the network tier that results in the lowest cost-
sharing obligation. For plans with two network tiers (for example,
participating providers and preferred providers), such as many PPOs,
where cost sharing is lower for preferred providers, only preferred
providers would be counted towards ECP standards.
We seek comment on the potential costs, benefits, and transfers
associated with this provision.
19. Standards for Delegated and Downstream Entities (Sec. 156.340)
We propose to amend and add language to Sec. 156.340, to extend
its applicability to QHP issuers on all Exchange models. The proposed
changes capture the delegated and downstream entity standards that
would apply to QHP issuers on State Exchanges and State Exchange SHOPs,
as well as QHP issuers providing coverage on Exchange models that use
the Federal platform, including, but not limited to, FFEs, FF-SHOPs,
SBE-FPs, and SBE-FP-SHOPs. HHS also proposes to add a requirement that
all agreements between QHP issuers and their downstream and delegated
entities include language stating that the relevant Exchange authority,
including State Exchanges, may demand and receive a delegated and
downstream entity's records related to the QHP issuer's obligations in
accordance with the minimum Federal standards related to Exchanges.
These proposed amendments are intended to hold QHP issuers in all
Exchange models responsible for their downstream and delegated
entities' compliance with applicable Exchange standards, and to make
their oversight obligations, and the obligations of their downstream
and delegated entities, explicit. We also propose conforming amendments
to the title of subpart D of 45 CFR part 156 from ``Standards for
Qualified Health Plan Issuers on Federally Facilitated Exchanges and
State-Based Exchanges on the Federal platform'' to ``Standards for
Qualified Health Plan Issuers on Specific Types of Exchanges''.
We anticipate these proposals will impose a minimal burden on QHP
issuers and Exchange authorities impacted by them. HHS expects some QHP
issuers may need to make changes to existing record retention policies
and their agreements with delegated and downstream entities. If
finalized as proposed, the conforming amendments will become applicable
to all books, contracts, computers, or other electronic systems,
including medical records and documentation relating to the QHP
issuer's obligations in accordance with Federal standards under
paragraph (a) of this section until 10 years from the final date of the
agreement period, as of the effective date of the final rule. State
Exchange authorities will retain primary enforcement authority and
would be responsible for ensuring QHP issuers in State Exchanges and
State Exchange SHOPs maintain oversight over downstream and delegated
entities.
We seek comment on the potential costs, benefits, and transfers
associated with this provision.
20. Payment for Cost-Sharing Reductions (Sec. 156.430)
We propose to amend Sec. 156.430 to clarify that the CSR data
submission process is mandatory only for those issuers that received
CSR payments from HHS for any part of the benefit year as a result of a
valid appropriation to make CSR payments, and voluntary for other
issuers. In the event HHS has not made CSR payments to issuers
[[Page 716]]
because there is no appropriation to do so, HHS will continue to
provide those issuers that have not received CSR payments from HHS for
any part of the benefit year the option to submit CSR data, but issuers
will not be required to do so. We do not expect any of these provisions
to increase burden on issuers, as this amendment would codify existing
practices.
We seek comment on any potential costs, benefits, and transfers
associated with this provision.
21. Quality Improvement Strategy (Sec. 156.1130)
We propose that beginning in 2023, a QHP issuer would be required
to address reducing health and health care disparities as one of their
QIS topic areas in addition to at least one other topic area outlined
in section 1311(g)(1) of the ACA, including improving health outcomes
of plan enrollees, preventing hospital readmissions, improving patient
safety and reducing medical errors, and promoting wellness and health.
We are not proposing any changes to regulatory text. We do not estimate
additional costs or burdens as a result of this proposal.
We seek comment on any potential costs, benefits, and transfers
associated with this proposal.
22. Medical Loss Ratio (Sec. Sec. 158.140, 158.150, 158.170)
We propose to amend Sec. 158.140(b)(2)(iii) to clarify that only
those provider incentives and bonuses that are tied to clearly defined,
objectively measurable, and well-documented clinical or quality
improvement standards that apply to providers may be included in
incurred claims for MLR reporting and rebate calculation purposes. To
the extent some issuers currently include in incurred claims payments
to providers that significantly reduce or eliminate rebates while
providing no value to consumers, the proposed clarification would
result in transfers from such issuers to enrollees in the form of
higher rebates or lower premiums. Although we do not know how many
issuers currently engage in such reporting practices or the amounts
improperly included in MLR calculations, we estimate the impact of the
proposed clarification by assuming that provider incentive and bonus
payments of 1.06 percent or more of paid claims (the top 5 percent of
such observations) may represent incentives based on MLR or similar
metrics. Based on this assumption and the MLR data for 2019, the
proposed clarification would increase rebates paid by issuers to
consumers or reduce premiums collected by issuers from consumers by
approximately $ 12 million per year.
We also propose to amend Sec. 158.150(a) to specify that only
expenditures directly related to activities that improve health care
quality may be included in QIA expenses for MLR reporting and rebate
calculation purposes. This proposed change would result in transfers
from issuers that currently include indirect expenses in QIA to
enrollees in the form of higher rebates or lower premiums. Although we
do not know how many issuers include indirect expenses in QIA, we
estimate the impact of the proposed change by assuming that indirect
expenses inflate QIA by 41.5 percent (the midpoint of the 33 percent-
to 50 percent range we have observed during MLR examinations) for half
of the issuers that report QIA expenses (based on the frequency of QIA-
related findings in MLR examinations). Based on these assumptions and
the MLR data for 2020, the proposed clarification would increase
rebates paid by issuers to consumers or reduce premiums collected by
issuers from consumers by approximately $ 49.8 million per year.
We also propose to make a technical amendment to Sec. 158.170(b)
to correct an oversight and remove the reference to the percentage of
premium QIA reporting option described in Sec. 158.221(b)(8), a
provision that was vacated by the United States District Court for the
District of Maryland in City of Columbus, et al. v. Cochran,\406\ and
thus deleted in part 2 of the 2022 Payment Notice final rule. We do not
anticipate any impact on rebates or premiums as a result of this
change. We seek comment on any potential costs, benefits, and transfers
associated with these provisions.
---------------------------------------------------------------------------
\406\ 523 F. Supp. 3d 731 (D. Md. 2021).
---------------------------------------------------------------------------
D. Regulatory Alternatives Considered
In developing the policies contained in this proposed rule, we
considered numerous alternatives to the presented proposals. Below we
discuss the key regulatory alternatives that we considered.
As described in prior rulemakings and the 2021 RA Technical Paper,
we considered a variety of alternatives to the proposed model
specifications and updated enrollment duration factors for the HHS risk
adjustment models.\407\ For example, we considered adding a non-linear
term or HCC counts terms for all enrollees in the adult and child risk
adjustment models. As detailed in the proposed 2022 Payment Notice and
the 2021 RA Technical Paper, we found that non-linear model
specifications often failed to converge, preventing us from testing the
impact of the non-linear model specifications on the magnitude of
transfers.\408\ In addition, the non-linear model specifications would
significantly overhaul the current linear models, increasing the
administrative burden on issuers and HHS. We also found that the HCC
counts terms approach posed gaming concerns, which would violate
principle six of the HHS-operated risk adjustment program by rewarding
coding proliferation.
---------------------------------------------------------------------------
\407\ 85 FR 78572 at 78583-78586; See the 2021 HHS-Operated Risk
Adjustment Technical Paper on Possible Model Changes, available at
https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\408\ Ibid.
---------------------------------------------------------------------------
In addition to the non-linear and HCC counts model specifications,
we also considered variations to the interacted HCC counts factors and
the two-stage weighted model specifications. Specifically, we tested
various alternative caps for the weights based on the distribution of
costs, but found the proposed caps resulted in better prediction on
average. For the prediction weights, we tested various alternative
forms of weights, including reciprocals of the square root of
prediction, log of prediction, and residuals from the first-step
estimation, but the reciprocal of the capped predictions resulted in
better PRs for low-cost enrollees compared to any of the other weights.
For the interacted HCC counts factors, we tested several HCCs and
considered adding and removing certain HCCs from the proposed list in
Table 3. We chose the list of HCCs in Table 3 because including these
HCCs most improved prediction for enrollees with the highest costs,
multiple HCCs, and with these specific HCCs. We also considered various
alternatives to structure the interacted HCC counts, such as applying
individual interacted HCC count factors (between 1-10 based on the
number of HCCs an enrollee has) to each of the selected HCCs included
in the models, instead of combining all of the selected HCCs into two
severe and transplant indicator groups. We chose the proposed model
specification because it would add fewer additional factors to the
models, which minimizes the increased burden on issuers and HHS without
sacrificing any significant predictive accuracy.
For the enrollment duration factors in the adult models, we propose
to replace the enrollment duration factors with monthly duration
factors of up to 6 months for enrollees with HCCs. The purpose of this
proposed change is to
[[Page 717]]
address the underprediction of plan liability for partial-year adult
enrollees with HCCs. As part of this assessment, we considered whether
enrollment duration factors by type of partial-year enrollment
(enrolling through a special enrollment period versus enrolling during
the annual open enrollment period and dropping enrollment partway
through the year), by market type (individual versus small group
market), or by specific HCC (as well as by type of HCC--acute versus
chronic) may be warranted. As previously noted, varying enrollment
duration factors by partial-year enrollment type or by market produced
factors that were generally very similar between partial- and full-year
enrollees, which indicates they would add little value to the models
while increasing complexity.\409\ We chose the proposed enrollment
duration factors, contingent on the presence of at least one HCC,
because these factors improve predictive accuracy for partial-year
enrollees and simplify the adult risk adjustment models compared to the
current models.\410\
---------------------------------------------------------------------------
\409\ See, for example, 85 FR 78572 at 78585-78586 and Sections
3.3.1 and 3.3.2 of the 2021 HHS-Operated Risk Adjustment Technical
Paper on Possible Model Changes, available at https://www.cms.gov/files/document/2021-ra-technical-paper.pdf.
\410\ As detailed above, these new proposed factors would only
apply to partial-year adult enrollees with up to 6 months of
enrollment and at least one payment HCC.
---------------------------------------------------------------------------
Relative to the other considered alternatives, our proposed model
specification changes would improve the current models' predictive
accuracy and minimize burden on issuers and HHS by avoiding unnecessary
complexity.
With respect to the proposed changes to Sec. 153.320(d), we
considered repealing risk adjustment state flexibility for the
individual catastrophic and non-catastrophic market risk pools, while
retaining risk adjustment state flexibility for the small group market
risk pool. Consistent with the directive in E.O. 14009 \411\ to
prioritize protecting and strengthening the ACA and making high-quality
health care accessible and affordable for all individuals, we
considered whether this approach is inconsistent with policies
described in Sections 1 and 3 of E.O. 14009. In prior rulemakings, we
received comments stating that risk adjustment state flexibility in any
market may result in risk selection, market destabilization, increased
premiums, smaller networks, and worse plan options. we believe that
generally retaining state flexibility could introduce unnecessary risk
of undermining the stated goals of the risk adjustment program.
---------------------------------------------------------------------------
\411\ Executive Order 14009; 86 FR 7793 (Feb. 2, 2021).
---------------------------------------------------------------------------
We also considered whether to adopt an exception for states that
previously requested reductions under Sec. 153.320(d) to the risk
adjustment transfers calculated by HHS under the state payment transfer
formula. In the one state that has requested to reduce transfers under
this policy, it has stabilized market participation and impacts issuers
who receive risk adjustment payments by less than 1 percent of
premiums.\412\ Although allowing state flexibility may undermine the
efficacy of risk adjustment by not fully compensating higher-risk plans
for their enrollees, we believe the benefit of maintaining
participation in markets that might otherwise only have a single issuer
offering coverage outweighs the potential harm of not fully
compensating the higher-risk plan for its enrollees when there is a de
minimis (less than 1 percent) impact on premiums. Additionally, under
the proposal in this rulemaking, if a prior participant seeks a future
reduction to risk adjustment transfers in the 2024 benefit year or
beyond, the state would need to demonstrate that it meets the de
minimis regulatory criteria, meaning no issuer would need to increase
its premiums by more than 1 percent as a result of the reduced risk
adjustment payments.
---------------------------------------------------------------------------
\412\ See, for example, the 2019, 2020, and 2021 Unified Rate
Review Public Use Files, available at https://www.cms.gov/CCIIO/Resources/Data-Resources/ratereview.
---------------------------------------------------------------------------
With regard to the proposed changes to Sec. 155.320, we considered
taking no action to modify the requirement that when an Exchange does
not reasonably expect to obtain sufficient verification data related to
enrollment in or eligibility for employer sponsored coverage, the
Exchange must select a random sample of applicants and attempt to
verify their attestation with the employer listed on their Exchange
application. However, based on HHS' experience conducting sampling,
this manual verification process requires significant resources for a
low return on investment, as using this method HHS identified only a
small population of applicants who received APTC/CSR payments
inappropriately. We believe the proposed change discussed earlier in
the preamble to design a process to verify enrollment in or eligibility
for an employer sponsored plan, informed by a risk assessment, is
reasonably designed to ensure the accuracy of data, and is based on the
activities or methods used by an Exchange such as studies, research,
and analysis of an Exchange's own enrollment data. We also believe the
proposed change would protect the integrity of the individual market by
allowing all Exchanges to proactively identify applicants with the
greatest incentive to forego enrolling in an employer sponsored plan in
favor of Exchange coverage with APTC/CSRs that they may not be eligible
to receive, thereby potentially adding high health risk to the
individual market risk pool that should be covered by the group health
market, for example.
We considered several alternatives to specifying in Sec. 155.420
that Exchanges may conduct pre-enrollment verification of eligibility
for special enrollment periods, at the option of the Exchange,
including requiring Exchanges to verify a certain percentage of special
enrollment period enrollments and designating specific special
enrollment period types for which eligibility must be verified by the
Exchange. However, we believed that imposing any requirements for pre-
enrollment special enrollment period verification would increase burden
on consumers and Exchanges and decrease implementation flexibility to
decide the best way to conduct special enrollment period verification
based on Exchange type, population characteristics, and trends.
HHS considered multiple options for measuring the improper payment
amounts and rates for State Exchanges to comply with its statutory
mandate in the PIIA. HHS developed and pilot tested the proposed
methodology with extensive collaboration from participating Exchanges
during a multi-year research and demonstration period. HHS considered
the following alternatives while developing this proposed rule:
1. Conducting No Reviews
HHS might take no preventive efforts to detect improper payments.
We would wait passively until third-party investigators, private
whistleblowers, qui tam relators, disgruntled relatives, or others
report speculation through Inspector General channels. Advanced
statistical analysis could estimate the odds of third-party prosecution
and project the improper payment amount and rate for each State
Exchange (with wide confidence intervals). This low intervention
strategy may not fully comply with statutory intent.
2. Placing More Responsibility on State Exchanges To Conduct Reviews
HHS could require that each State Exchange determine its own
improper payment rate with broad discretion on
[[Page 718]]
the methodology. This option would maximize regulatory flexibility
while still complying with PIIA 2019 requirements. However, diverse
methodology would make the State Exchanges' results difficult to
compare and of variable validity. In addition, the costs resulting from
higher error rates are borne by the federal government in the form of
increased APTC and CSRs, giving State Exchanges' minimal incentive to
aggressively reduce improper payments.
3. Placing More Responsibility on State Exchanges To Engage Third-Party
Reviewers
HHS could require that State Exchanges engage third-party reviewers
to determine the improper payment rate. As with financial reporting,
the State Exchange could select among competing vendors to obtain its
preferred combination of methodology, service, quality, and price.
However, this approach would require more work and resources from both
State Exchanges and HHS than the proposed methodology would require.
The third party would need to obtain personally identifiable
information from both state and federal data systems. These processes
suffer from potential record matching and data security issues. In
addition, competing vendors might offer incompatible methodologies,
producing non-comparable improper payment rates.
4. Conducting a Random Sample Across All State Exchanges
HHS could annually sample from the population of all State Exchange
enrollees, rather than within each State Exchange. Thus, more cases
would come from larger State Exchanges. This design would increase the
efficiency and decrease the variance for the national estimate, but it
would not provide an estimate for each State Exchange. It also would
not reduce the burden on each State Exchange and may not comply with
statutory intent.
With respect to standardized options, we considered a range of
options for our proposed policy approach at Sec. 156.201. On one end
of this range, we considered resuming standardized options as reflected
in the 2017 and 2018 Payment Notices. This approach would have allowed
issuers to voluntarily offer standardized options and have the
Exchanges on the Federal platform, web-brokers, and Classic DE and EDE
Pathways differentially display these plans. We also considered
gradually limiting the number of non-standardized options per issuer,
product network type, metal level, and service area over the course of
several PYs. We also considered preferentially displaying standardized
options over non-standardized options. We also considered requiring
issuers to offer exclusively standardized options in FFEs and SBE-FPs.
We believe the approach we have chosen for standardized options in
which we propose to require issuers to offer standardized options and
do not propose to limit the number of non-standardized offerings in PY
2023 strikes the greatest balance between simplifying the plan
selection process, combatting discriminatory benefit designs, and
advancing health equity, all while promoting a smooth transition to the
introduction of standardized options.
For our proposal in Sec. Sec. 155.240(e), 155.305(f)(5), and
155.340 on prorating the calculation and administration of premium and
APTC, HHS considered an alternative form of implementation in which HHS
would perform the proration on behalf of each State Exchange which does
not already implement proration according to the proposed methodology.
This approach would lessen concern regarding the burden of implementing
a new proration methodology among State Exchanges. HHS already has the
structures in place to prorate APTC and premium amounts in accordance
with the proposed methodology and has already implemented proration in
the FFEs and SBE-FPs.\413\ Under this alternative, HHS would assume
responsibility for prorating the amount of APTC due to each State
Exchange based on the methodology HHS proposes in Sec. 155.340 which
states that when an enrollee is enrolled in a particular policy for
less than the full coverage month (including when the enrollee is
enrolled in multiple policies within a month, each lasting less than
the full coverage month) the amount of APTC paid to the issuer of the
policy will be calculated as the product of (1) the APTC applied on the
policy for one month of coverage divided by the number of days in the
month, and (2) the number of days for which coverage is provided during
the applicable month. However, this alternative would require State
Exchanges to agree to allow HHS to use the data on the monthly SBMI to
calculate the prorated amount. This would require State Exchanges to
review payment reports to ensure the correct calculation of APTC and
premium is reflected on each applicable State Exchanges' 1095-A. HHS
expects that this alternative would produce additional burden of $4,500
in contract labor to update each State Exchange's SBMI and would
necessitate increased data sharing and coordination back and forth
between HHS and the applicable State Exchanges. In order to streamline
the process of proration and allow State Exchanges greater control in
the administration of APTC, HHS determined that it would propose that
each State Exchange would prorate their own APTC and premium amounts
for the applicable enrollees in their state. HHS seeks comment on the
alternative proposals considered.
---------------------------------------------------------------------------
\413\ Under the SBE-FP agreement, the same method also applies
in the SBE-FPs, as they rely on the Federal platform, which
calculates applicable premiums in those Exchanges.
---------------------------------------------------------------------------
Additionally, for the proposal to prorate APTC amounts with
amendments to Sec. Sec. 155.240, 155.305(f)(5) and 155.340, we
considered proposing to implement this requirement for the 2023 benefit
year. However, after analyzing the potential burden on State Exchanges
to achieve operational readiness, we concluded that 2023 may not
provide sufficient time. Therefore, we propose 2024 benefit year
implementation and request comment on the feasibility of 2023 benefit
year implementation.
E. Regulatory Flexibility Act
The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires
agencies to prepare an initial regulatory flexibility analysis to
describe the impact of the proposed rule on small entities, unless the
head of the agency can certify that the rule will not have a
significant economic impact on a substantial number of small entities.
The RFA generally defines a ``small entity'' as (1) a proprietary firm
meeting the size standards of the Small Business Administration (SBA),
(2) a not-for-profit organization that is not dominant in its field, or
(3) a small government jurisdiction with a population of less than
50,000. States and individuals are not included in the definition of
``small entity.'' HHS uses a change in revenues of more than 3 to 5
percent as its measure of significant economic impact on a substantial
number of small entities.
In this proposed rule, we propose standards for the risk adjustment
and HHS-RADV programs, which are intended to stabilize premiums and
reduce incentives for issuers to avoid higher-risk enrollees. Because
we believe that insurance firms offering comprehensive health insurance
policies generally exceed the size thresholds for ``small entities''
established by the SBA, we do not believe that an initial regulatory
[[Page 719]]
flexibility analysis is required for such firms.
We believe that health insurance issuers and group health plans
would be classified under the North American Industry Classification
System (NAICS) code 524114 (Direct Health and Medical Insurance
Carriers). According to SBA size standards, entities with average
annual receipts of $41.5 million or less would be considered small
entities for these NAICS codes. Issuers could possibly be classified in
621491 (HMO Medical Centers) and, if this is the case, the SBA size
standard would be $35 million or less.\414\ We believe that few, if
any, insurance companies underwriting comprehensive health insurance
policies (in contrast, for example, to travel insurance policies or
dental discount policies) fall below these size thresholds. Based on
data from MLR annual report submissions for the 2019 MLR reporting
year, approximately 77 out of 479 issuers of health insurance coverage
nationwide had total premium revenue of $41.5 million or less.\415\
This estimate may overstate the actual number of small health insurance
issuers that may be affected, since over 72 percent of these small
issuers belong to larger holding groups, and many, if not all, of these
small companies are likely to have non-health lines of business that
will result in their revenues exceeding $41.5 million. Only 10 of these
90 potentially small entities, three of them part of larger holding
groups, are estimated to experience a change in rebates under the
proposed amendments to the MLR provisions of this proposed rule in part
158. Therefore, we do not expect the proposed MLR provisions of this
rule to affect a substantial number of small entities.
---------------------------------------------------------------------------
\414\ https://www.sba.gov/document/support--table-size-standards.
\415\ Available at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------
The proposals related to SEIPM at Sec. Sec. 155.1500-155.1540 will
affect only State Exchanges. As state governments do not constitute
small entities under the statutory definition, and as all State
Exchanges have revenues exceeding $5 million, an impact analysis for
these provisions is not required under the RFA.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule under title XVIII, title XIX, or
part B of title 42 of the Social Security Act may have a significant
impact on the operations of a substantial number of small rural
hospitals. This analysis must conform to the provisions of section 603
of the RFA. For purposes of section 1102(b) of the Act, we define a
small rural hospital as a hospital that is located outside of a
metropolitan statistical area and has fewer than 100 beds. While this
rule is not subject to section 1102 of the Act, we have determined that
This proposed rule would not affect small rural hospitals. Therefore,
the Secretary has determined that this proposed rule would not have a
significant impact on the operations of a substantial number of small
rural hospitals.
F. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a proposed rule that includes any
Federal mandate that may result in expenditures in any 1 year by a
state, local, or Tribal governments, in the aggregate, or by the
private sector, of $100 million in 1995 dollars, updated annually for
inflation. In 2021, that threshold is approximately $158 million.
Although we have not been able to quantify all costs, we expect the
combined impact on state, local, or Tribal governments and the private
sector does not meet the UMRA definition of unfunded mandate.
G. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a proposed rule that imposes
substantial direct costs on state and local governments, preempts state
law, or otherwise has federalism implications.
In compliance with the requirement of E.O. 13132 that agencies
examine closely any policies that may have federalism implications or
limit the policy making discretion of the states, we have engaged in
efforts to consult with and work cooperatively with affected states,
including participating in conference calls with and attending
conferences of the NAIC, and consulting with state insurance officials
on an individual basis.
While developing this rule, we attempted to balance the states'
interests in regulating health insurance issuers with the need to
ensure market stability. By doing so, we complied with the requirements
of E.O. 13132.
Because states have flexibility in designing their Exchange and
Exchange-related programs, state decisions will ultimately influence
both administrative expenses and overall premiums. States are not
required to establish an Exchange or risk adjustment program. For
states that elected previously to operate an Exchange, those states had
the opportunity to use funds under Exchange Planning and Establishment
Grants to fund the development of data. Accordingly, some of the
initial cost of creating programs was funded by Exchange Planning and
Establishment Grants. After establishment, Exchanges must be
financially self-sustaining, with revenue sources at the discretion of
the state. Current State Exchanges charge user fees to issuers.
In our view, while this proposed rule would not impose substantial
direct requirement costs on state and local governments, this
regulation has federalism implications due to potential direct effects
on the distribution of power and responsibilities among the state and
federal governments relating to determining standards relating to
health insurance that is offered in the individual and small group
markets. For example, the repeal of the risk adjustment state
flexibility policy may have federalism implications, but they are
mitigated because states have the option to operate their own Exchange
and risk adjustment program if they believe the HHS risk adjustment
methodology does not account for state-specific factors unique to the
state's markets.
In addition, we believe this proposed regulation has federalism
implications due to our proposal for Exchanges to design a new risk-
based verification process for enrollment in or eligibility for
employer sponsored plan coverage that meets minimum value standards,
that is based on the Exchange's assessment of risk for inappropriate
APTC/CSR payments. However, the federalism implications are mitigated
because the proposed requirement provides Exchanges with the
flexibility to determine the best process to verify employer sponsored
coverage and may choose not to implement such a risk-based verification
process.
As previously noted, the proposals in this rule related to SEIPM
would impose a minimal unfunded mandate on State Exchanges to supply
data for the improper payment calculation. Accordingly, E.O. 13132 does
not apply to this section of the proposed rule. In addition, statute
requires HHS to determine the amount and rate of improper payments.
Finally, states have the option to choose an FFE or SBE-FP, each of
which place different federal burdens on the state. As the SEIPM
section of the proposed rule should not conflict with state law, HHS
does not anticipate any preemption of state law. We invite State
Exchanges to submit comments on this section of the proposed rule if
they believe it would conflict with state law.
[[Page 720]]
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on December 15, 2021.
List of Subjects
45 CFR Part 144
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 147
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 153
Administrative practice and procedure, Health care, Health
insurance, Health records, Intergovernmental relations, Organization
and functions (Government agencies), Reporting and recordkeeping
requirements.
45 CFR Part 155
Administrative practice and procedure, Advertising, Brokers,
Conflict of interests, Consumer protection, Grants administration,
Grant programs-health, Health care, Health insurance, Health
maintenance organizations (HMO), Health records, Hospitals, Indians,
Individuals with disabilities, Intergovernmental relations, Loan
programs-health, Medicaid, Organization and functions (Government
agencies), Public assistance programs, Reporting and recordkeeping
requirements, Technical assistance, Women and youth.
45 CFR Part 156
Administrative practice and procedure, Advertising, Advisory
committees, Brokers, Conflict of interests, Consumer protection, Grant
programs-health, Grants administration, Health care, Health insurance,
Health maintenance organization (HMO), Health records, Hospitals,
Indians, Individuals with disabilities, Loan programs-health, Medicaid,
Organization and functions (Government agencies), Public assistance
programs, Reporting and recordkeeping requirements, State and local
governments, Sunshine Act, Technical assistance, Women, Youth.
45 CFR Part 158
Administrative practice and procedure, Claims, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, under the authority at 5
U.S.C. 301, the Department of Health and Human Services proposes to
amend 45 CFR subtitle A, subchapter B, as set forth below.
PART 144--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
0
1. The authority citation for part 144 continues to read as follows:
Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, 300gg-
92, and 300gg-111 through 300gg-139, as amended.
Sec. 144.103 [Amended]
0
2. Amend Sec. 144.103 in the definition of ``large group market'' by
removing the phrase ``, unless otherwise provided under State law.''
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
3. The authority citation for part 147 continues to read as follows:
Authority: 42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92, as amended, and section 3203, Pub. L. 116-136, 134 Stat.
281.
0
4. Amend Sec. 147.104 by--
0
a. Revising paragraph (e);
0
b. Redesignating paragraph (i) as paragraph (j); and
0
c. Adding a new paragraph (i).
The revision and addition read as follows:
Sec. 147.104 Guaranteed availability of coverage.
* * * * *
(e) Marketing. A health insurance issuer and its officials,
employees, agents, and representatives must comply with any applicable
State laws and regulations regarding marketing by health insurance
issuers and cannot employ marketing practices or benefit designs that
will have the effect of discouraging the enrollment of individuals with
significant health needs in health insurance coverage or discriminate
based on an individual's race, color, national origin, present or
predicted disability, age, sex, sexual orientation, gender identity,
expected length of life, degree of medical dependency, quality of life,
or other health conditions.
* * * * *
(i) Coverage denials for failure to pay premiums for prior
coverage. A health insurance issuer that denies coverage to an
individual or employer due to the individual's or employer's failure to
pay premium owed under a prior policy, certificate, or contract of
insurance, including by attributing payment of premium for a new
policy, certificate, or contract of insurance to the prior policy,
certificate, or contract of insurance, violates paragraph (a) of this
section.
* * * * *
PART 153--STANDARDS RELATED TO REINSURANCE, RISK CORRIDORS, AND
RISK ADJUSTMENT UNDER THE AFFORDABLE CARE ACT
0
5. The authority citation for part 153 continues to read as follows:
Authority: 42 U.S.C. 18031, 18041, and 18061 through 18063.
0
6. Amend Sec. 153.320 by--
0
a. Revising paragraphs (d) introductory text and (d)(1)(iii);
0
b. Adding paragraph (d)((1)(iv);
0
c. Revising paragraphs (d)(4)(i)(A) and (B); and
0
d. Adding paragraph (d)(5).
The revisions and additions read as follows:
Sec. 153.320 Federally certified risk adjustment methodology.
* * * * *
(d) State flexibility to request reductions to transfers. For the
2020 through 2023 benefit years, States can request to reduce risk
adjustment transfers in the State's individual catastrophic, individual
non-catastrophic, small group, or merged markets risk pools by up to 50
percent in States where HHS operates the risk adjustment program.
Beginning with the 2024 benefit year, only prior participants, as
defined in paragraph (d)(5) of this section, may request to reduce risk
adjustment transfers in the State's individual catastrophic, individual
non-catastrophic, small group, or merged markets risk pools by up to 50
percent in States where HHS operates the risk adjustment program.
(1) * * *
(iii) For the 2020 through 2023 benefit years, a justification for
the reduction requested demonstrating the State-specific factors that
warrant an adjustment to more precisely account for relative risk
differences in the State individual catastrophic, individual non-
catastrophic, small group, or merged market risk pool, or demonstrating
the requested reduction would have de minimis impact on the necessary
premium increase to cover the transfers for issuers that would receive
reduced transfer payments; or
(iv) Beginning with the 2024 benefit year, a justification for the
reduction requested demonstrating the requested reduction would have de
minimis impact on the necessary premium increase to cover the transfers
for issuers
[[Page 721]]
that would receive reduced transfer payments.
* * * * *
(4) * * *
(i) * * *
(A) For the 2020 through 2023 benefit years, that State-specific
rules or other relevant factors warrant an adjustment to more precisely
account for relative risk differences in the State's individual
catastrophic, individual non-catastrophic, small group, or merged
market risk pool and support the percentage reduction to risk
adjustment transfers requested; or State-specific rules or other
relevant factors warrant an adjustment to more precisely account for
relative risk differences in the State's individual catastrophic,
individual non-catastrophic, small group, or merged market risk pool
and the requested reduction would have de minimis impact on the
necessary premium increase to cover the transfers for issuers that
would receive reduced transfer payments.
(B) Beginning with the 2024 benefit year that the requested
reduction would have de minimis impact on the necessary premium
increase to cover the transfers for issuers that would receive reduced
transfer payments.
* * * * *
(5) Exception for prior participants. As used in paragraph (d) of
this section, prior participants mean States that submitted a State
reduction request in the State's individual catastrophic, individual
non-catastrophic, small group, or merged market risk pool in the 2020,
2021, 2022, or 2023 benefit year.
0
7. Amend Sec. 153.710 by--
0
a. Revising paragraphs (h)(1) introductory text and (h)(1)(iii) and
(iv);
0
b. Adding paragraph (h)(1)(v); and
0
c. Revising paragraphs (h)(2) and (3).
The revisions and addition read as follows:
Sec. 153.710 Data requirements.
* * * * *
(h) * * *
(1) Notwithstanding any discrepancy report made under paragraph
(d)(2) of this section, any discrepancy filed under Sec.
153.630(d)(2), or any request for reconsideration under Sec.
156.1220(a) of this subchapter with respect to any risk adjustment
payment or charge, including an assessment of risk adjustment user fees
and risk adjustment data validation adjustments; reinsurance payment;
cost-sharing reduction payment or charge; or risk corridors payment or
charge, unless the dispute has been resolved, an issuer must report,
for purposes of the risk corridors and MLR programs:
* * * * *
(iii) A cost-sharing reduction amount equal to the actual amount of
cost-sharing reductions for the benefit year as calculated under Sec.
156.430(c) of this subchapter, to the extent not reimbursed to the
provider furnishing the item or service;
(iv) For medical loss ratio reporting only, the risk corridors
payment to be made or charge assessed by HHS under Sec. 153.510; and
(v) The risk adjustment data validation adjustment calculated by
HHS in the applicable benefit year's Summary Report of Benefit Year
Risk Adjustment Data Validation Adjustments to Risk Adjustment
Transfers.
(2) An issuer must report during the current MLR and risk corridors
reporting year any adjustment made or approved by HHS for any risk
adjustment payment or charge, including an assessment of risk
adjustment user fees and risk adjustment data validation adjustments;
any reinsurance payment; any cost-sharing reduction payment or charge;
or any risk corridors payment or charge before August 15, or the next
applicable business day, of the current MLR and risk corridors
reporting year unless instructed otherwise by HHS. An issuer must
report any adjustment made or approved by HHS for any risk adjustment
payment or charge, including an assessment of risk adjustment user
fees; any reinsurance payment; any cost-sharing reduction payment or
charge; or any risk corridors payment or charge where such adjustment
has not been accounted for in a prior MLR and Risk Corridor Annual
Reporting Form, in the MLR and Risk Corridors Annual Reporting Form for
the following reporting year.
(3) In cases where HHS reasonably determines that the reporting
instructions in paragraph (h)(1) or (2) of this section would lead to
unfair or misleading financial reporting, issuers must correct their
data submissions in a form and manner to be specified by HHS.
0
8. Revise Sec. 153.730 to read as follows:
Sec. 153.730 Deadline for submission of data.
A risk adjustment covered plan or a reinsurance-eligible plan in a
State in which HHS is operating the risk adjustment or reinsurance
program, as applicable, must submit data to be considered for risk
adjustment payments and charges and reinsurance payments for the
applicable benefit year by April 30 of the year following the
applicable benefit year or, if such date is not a business day, the
next applicable business day.
PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED
STANDARDS UNDER THE AFFORDABLE CARE ACT
0
9. The authority citation for part 155 continues to read as follows:
Authority: 42 U.S.C. 18021-18024, 18031-18033, 18041-18042,
18051, 18054, 18071, and 18081-18083.
Sec. 155.120 [Amended]
0
10. Amend Sec. 155.120 in paragraph (c)(1)(ii) by removing the phrase
``age, or sex'' and adding in its place the phrase ``age, sex, sexual
orientation, or gender identity''.
Sec. 155.206 [Amended]
0
11. Amend Sec. 155.206 in paragraph (i) by removing the phrase ``$100
for each day for each'' and adding in its place the phrase ``$100 for
each day, as adjusted annually under 45 CFR part 102, for each''.
0
12. Amend Sec. 155.220 by--
0
a. Revising paragraphs (c)(3)(i)(A) and (L);
0
b. Adding paragraph (c)(3)(i)(M);
0
c. In paragraph (j)(2)(i) by removing the phrase ``age, or sex'' and
adding in its place the phrase ``age, sex, sexual orientation, or
gender identity'';
0
d. Revising paragraphs (j)(2)(ii);
0
e. In paragraph (j)(2)(iv), by removing the phrase ``described in Sec.
155.260(b)(2); and'' and adding in its place the phrase ``described in
Sec. 155.260(b)(2);''; and
0
f. Adding paragraphs (j)(2)(vi) through (viii).
The revisions and additions read as follows:
Sec. 155.220 Ability of States to permit agents and brokers and web-
brokers to assist qualified individuals, qualified employers, or
qualified employees enrolling in QHPs.
* * * * *
(c) * * *
(3) * * *
(i) * * *
(A) Disclose and display the following QHP information provided by
the Exchange or directly by QHP issuers consistent with the
requirements of Sec. 155.205(c), and to the extent that enrollment
support for a QHP is not available using the web-broker's website,
prominently display a standardized disclaimer provided by HHS stating
that enrollment support for the QHP is available on the Exchange
website, and provide a Web link to the Exchange website:
(1) Premium and cost-sharing information;
(2) The summary of benefits and coverage established under section
2715 of the PHS Act;
(3) Identification of whether the QHP is a bronze, silver, gold, or
platinum
[[Page 722]]
level plan as defined by section 1302(d) of the Affordable Care Act, or
a catastrophic plan as defined by section 1302(e) of the Affordable
Care Act;
(4) The results of the enrollee satisfaction survey, as described
in section 1311(c)(4) of the Affordable Care Act;
(5) Quality ratings assigned in accordance with section 1311(c)(3)
of the Affordable Care Act; and
(6) The provider directory made available to the Exchange in
accordance with Sec. 156.230 of this subchapter.
* * * * *
(L) Not display QHP advertisements or recommendations, or otherwise
provide favored or preferred placement in the display of QHPs, based on
compensation the agent, broker, or web-broker receives from QHP
issuers; and
(M) Prominently display a clear explanation of the rationale for
QHP recommendations and the methodology for its default display of
QHPs.
* * * * *
(j) * * *
(2) * * *
(ii) Provide the federally-facilitated Exchanges with correct
information under section 1411(b) of the Affordable Care Act,
including, but not limited to:
(A) Only entering an email address on an application for Exchange
coverage or an application for advance payments of the premium tax
credit and cost sharing reductions for QHPs that is secure, not
disposable, and belongs to the consumer or the consumer's authorized
representative designated in compliance with Sec. 155.227. A
consumer's email address may only be entered on an Exchange application
with the consent of the consumer or the consumer's authorized
representative. Properly entered email addresses must adhere to the
following guidelines:
(1) The email address may not have domains that remove email from
an inbox after a set period of time;
(2) The email address must be accessible by the consumer, or the
consumer's authorized representative designated in compliance with
Sec. 155.227, and may not be accessible by the agent, broker, or web-
broker assisting the consumer; and
(3) The email address may not have domains that belong to the
agent, broker, or web-broker or their business or agency.
(B) Only entering a telephone number on an application for Exchange
coverage or an application for advance payments of the premium tax
credit and cost sharing reductions for QHPs that belongs to the
consumer or their authorized representative designated in compliance
with Sec. 155.227. Telephone numbers entered on Exchange applications
may not be the personal number or business number of the agent, broker,
or web-broker assisting the consumer, or their business or agency,
unless the telephone number is actually that of the consumer or their
authorized representative.
(C) Only entering a mailing address on an application for Exchange
coverage or an application for advance payments of the premium tax
credit and cost sharing reductions for QHPs that belongs to, or is
primarily accessible by, the consumer or their authorized
representative designated in compliance with Sec. 155.227, is not for
the exclusive or convenient use of the agent, broker, or web-broker,
and is an actual residence or a secure location where the consumer or
their authorized representative may receive correspondence, such as a
P.O. Box or homeless shelter. Mailing addresses entered on Exchange
applications may not be that of the agent, broker, or web-broker
assisting the consumer, or their business or agency, unless the address
is the actual residence of the consumer or their authorized
representative.
(D) When submitting household income projections used by the
Exchange to determine a tax filer's eligibility for advance payments of
the premium tax credit in accordance with Sec. 155.305(f) or cost-
sharing reductions in accordance with Sec. 155.305(g), only entering a
consumer's household income projection that the consumer or the
consumer's authorized representative designated in compliance with
Sec. 155.227 has knowingly authorized and confirmed as accurate.
Household income projections on Exchange applications must be
calculated and attested to by the consumer. The agent, broker, or web-
broker assisting the consumer may answer questions posed by the
consumer related to household income projection, such as helping the
consumer determine what qualifies as income.
* * * * *
(vi) Not engage in scripting and other automation of interactions
with CMS Systems or the Direct Enrollment Pathways, unless approved in
advance in writing by CMS.
(vii) Only use an identity that belongs to the consumer when
identity proofing the consumer's account on HealthCare.gov.
(viii) When providing information to federally-facilitated
Exchanges that may result in a determination of eligibility for a
special enrollment period in accordance with Sec. 155.420, obtain
authorization from the consumer to submit the request for a
determination of eligibility for a special enrollment period and make
the consumer aware of the specific triggering event and special
enrollment period for which the agent, broker, or web-broker will be
submitting an eligibility determination request on the consumer's
behalf.
* * * * *
0
13. Amend Sec. 155.240 by adding paragraph (e)(2) to read as follows:
Sec. 155.240 Payment of premiums.
* * * * *
(e) * * *
(2) For plan years 2024 and beyond, in each Exchange, the premium
for a policy in which an enrollee is enrolled for less than the full
coverage month, including when the enrollee is enrolled in multiple
policies within a month, each lasting less than the full coverage
month, must equal the product of:
(i) The premium for 1 month of coverage divided by the number of
days in the month; and
(ii) The number of days for which coverage is being provided in the
month described in paragraph (e)(1)(i) of this section.
0
14. Amend Sec. 155.305 by revising paragraph (f)(1)(i) to read as
follows:
Sec. 155.305 Eligibility standards.
* * * * *
(f) * * *
(1) * * *
(i) He or she is expected to have a household income that will
qualify the tax filer as an applicable taxpayer according to 26 CFR
1.36B-2(b) for the benefit year for which coverage is requested; and
* * * * *
0
15. Amend Sec. 155.320 by--
0
a. Revising paragraphs (d)(4) introductory text, (d)(4)(i) introductory
text, and (d)(4)(i)(A);
0
b. Removing paragraph (d)(4)(i)(D).
0
c. Redesignating paragraph (d)(4)(i)(E) as paragraph (d)(4)(i)(D).
0
d. Removing paragraph (d)(4)(i)(F);
0
e. Redesignating paragraph (d)(4)(i)(G) as paragraph (d)(4)(i)(E) and
revising it; and
0
f. Removing and reserving paragraph (d)(4)(ii).
The revisions read as follows:
Sec. 155.320 Verification process related to eligibility for
insurance affordability programs.
* * * * *
(d) * * *
(4) Alternate procedures. For any benefit year for which it does
not reasonably expect to obtain sufficient
[[Page 723]]
verification data as described in paragraphs (d)(2)(i) through (iii) of
this section, the Exchange may follow the procedures specified in
paragraph (d)(4)(i) of this section, or the Exchange may follow the
procedures specified in paragraph (d)(4)(ii) of this section. For
purposes of this paragraph (d)(4), the Exchange reasonably expects to
obtain sufficient verification data for any benefit year when, for the
benefit year, the Exchange is able to obtain data about enrollment in
or eligibility for qualifying coverage in an eligible employer
sponsored plan from at least one electronic data source that is
available to the Exchange and that has been approved by HHS, based on
evidence showing that the data source is sufficiently current,
accurate, and minimizes administrative burden, as described under
paragraphs (d)(2)(i) of this section.
(i) Based on the Exchange's assessment of risk for inappropriate
payment of advance payments of the premium tax credit or cost-sharing
reductions, implement a verification process that is reasonably
designed to ensure the accuracy of the data and is based on the
activities or methods used by an Exchange such as studies, research,
and analysis of an Exchange's own enrollment data, for enrollment in or
eligibility for qualifying coverage in an eligible employer sponsored
plan, as appropriate.
(A) If, as part of the verification process described under
paragraph (d)(4)(i) of this section, the Exchange will be contacting
any employer identified on the application for the applicant and the
members of his or her family, as defined in 26 CFR 1.36B-1(d), to
verify whether the applicant is enrolled in an eligible employer
sponsored plan or is eligible for qualifying coverage in an eligible
employer sponsored plan for the benefit year for which coverage is
requested, the Exchange must provide notice to the applicant;
* * * * *
(E) To carry out the process described in paragraph (d)(4)(iii) of
this section, the Exchange must only disclose an individual's
information to an employer to the extent necessary for the employer to
identify the employee.
* * * * *
0
16. Amend Sec. 155.340 by adding paragraph (i) to read as follows:
Sec. 155.340 Administration of advance payments of the premium tax
credit and cost-sharing reductions.
* * * * *
(i) Calculation of advance payments of the premium tax credit when
policy coverage lasts less than the full coverage month. (1) For plan
years beginning in 2024 and beyond, when the Exchange determines that
an individual is eligible for advance payments of the premium tax
credit and the enrollee is enrolled in a policy for less than the full
coverage month, including when the enrollee is enrolled in multiple
policies within a month, each lasting less than the full coverage
month, the amount of the advance payment of the premium tax credit paid
to the issuer of the policy must equal the product of--
(i) The advance payments of the premium tax credit applied to the
policy for one month of coverage divided by the number of days in the
month; and
(ii) The number of days for which coverage is being provided in the
month under the policy described in paragraph (i)(1)(i) of this
section.
(2) [Reserved]
0
17. Amend Sec. 155.420 by adding paragraph (g) to read as follows:
Sec. 155.420 Special enrollment periods.
* * * * *
(g) Pre-enrollment special enrollment period verification. At the
option of the Exchange, an Exchange may verify prior to processing a
qualified individual's plan selection that the qualified individual is
eligible for a special enrollment period under this section. In special
circumstances where the Exchange determines that such pre-enrollment
special enrollment period verification may cause undue burden on
qualified individuals, the Exchange may provide an exception to the
pre-enrollment special enrollment period verification process, provided
it does so in a manner that is not based on a prohibited discriminatory
basis. Exchanges on the Federal platform will conduct pre-enrollment
special enrollment verification of eligibility only for special
enrollment periods under paragraph (d)(1) of this section.
0
18. Amend Sec. 155.1200--
0
a. In paragraph (c) introductory text by removing the phrase ``HHS for
review'' and adding in its place the phrase, ``HHS for review, unless a
State Exchange is meeting its programmatic audit requirement for a
given benefit year under paragraph (e) of this section''; and
0
b. By adding paragraph (e).
The addition reads as follows.
Sec. 155.1200 General program integrity and oversight requirements.
* * * * *
(e) State Exchange Improper Payment Measurement (SEIPM) program.
For a given benefit year, a State Exchange may meet the independent
external programmatic audit requirement outlined in paragraph (c) of
this section by completing the required SEIPM program process,
established through 45 CFR part 155, subpart P.
0
19. Add subpart P to read as follows:
Subpart P--State Exchange Improper Payment Measurement Program
Sec.
155.1500 Purpose and definitions.
155.1505 Program notification and planning process.
155.1510 Data collection.
155.1515 Review process and improper payment rate determination.
155.1520 Error findings decisions.
155.1525 Redetermination of error findings decisions.
155.1530 Appeal of redetermination decision.
155.1535 Corrective action plan.
155.1540 Failure to comply.
Subpart P--State Exchange Improper Payment Measurement Program
Sec. 155.1500 Purpose and definitions.
(a) Purpose. This subpart sets forth the requirements of the State
Exchange Improper Payment Measurement program.
(b) Definitions. As used in this subpart--
Appeal of redetermination decision (or appeal decision) means the
HHS appeal decision resulting from a State Exchange's appeal of the
HHS' redetermination decision.
Corrective action plan (CAP) means the plan a State Exchange
develops in order to correct errors resulting in improper payments.
Error means a finding by HHS that a State Exchange did not
correctly apply a requirement in subparts D and E of this part
regarding eligibility for and enrollment in a qualified health plan;
advance payments of the premium tax credit, including the calculation
of advance payments of the premium tax credit; redeterminations of
eligibility determinations during a benefit year; or annual eligibility
redeterminations, which have a payment impact.
Error findings decision means the enumeration of errors made by a
State Exchange, including a determination of how the enumerated errors
inform improper payment estimation and reporting requirements.
Redetermination of an error findings decision (or redetermination
decision) means HHS' decision resulting from a State Exchange's request
for a redetermination of an error findings decision.
Review means the process of analyzing and assessing data submitted
by a State Exchange to HHS in order to determine a State Exchange's
[[Page 724]]
compliance with subparts D and E of this part as it relates to improper
payments.
State Exchange Improper Payment Measurement (SEIPM) program means
the process for determining estimated improper payments and other
information required under the Payment Integrity Information Act of
2019, and implementing guidance, for advance payments of the premium
tax credit, which includes a review of a State Exchange's
determinations regarding eligibility for and enrollment in a qualified
health plan; the calculation of advance payments of the premium tax
credit; redeterminations of eligibility determinations during a benefit
year; and annual eligibility redeterminations.
Sec. 155.1505 Program notification and planning process.
(a) Annual program notification. Beginning no earlier than in 2023,
prior to the start of the measurement year, HHS will annually issue a
notification to State Exchanges concerning information related to the
SEIPM program and the program's upcoming measurement cycle, which may
include but would not be limited to review criteria; key changes from
prior measurement cycles, where applicable; or other modifications
regarding specific SEIPM activities.
(b) Issuance of annual program schedule. Beginning no earlier than
2023, prior to the start of the measurement year, HHS will annually
issue a schedule that prescribes the timeline for the data requests in
accordance with Sec. 155.1510.
(c) Notification of changes. In response to the annual program
notification, the State Exchange must provide HHS with operational and
policy information required to perform the SEIPM review process, as
well as any operational, policy, or other changes that may impact the
SEIPM review process within the deadline prescribed in the annual
program schedule.
Sec. 155.1510 Data collection.
(a) Requirements. For purposes of the SEIPM program, a State
Exchange must annually submit the following eligibility and enrollment
information, in a manner specified by HHS.
(1) Pre-sampling data.
(2) Sampled unit data.
(b) Timing. The State Exchange must submit the data specified in
paragraph (a) of this section within the timelines specified in the
annual program schedule described in Sec. 155.1505(c). HHS will
consider requests for extension when extreme circumstances hinder the
ability of a State Exchange to submit data in accordance with the
requirements of this section.
(c) Compliance. Failure to timely provide the information in
accordance with paragraph (a) or (b) of this section may result in one
or more error findings during the review based upon insufficient data
to support that the State was in compliance with subparts D and E of
this part as it relates to advance payments of premium tax credits.
Sec. 155.1515 Review process and improper payment rate
determination.
(a) Receipt of data. HHS will maintain a record of status of
receipt for the information that is requested from each State Exchange
for a minimum of 10 years.
(b) Review of records. For each sampled record, HHS will review the
information provided by the State Exchange. The review will determine
whether any errors were made in a State Exchange's determinations
regarding eligibility for and enrollment in a qualified health plan;
advance payments of the premium tax credit, including the calculation
of advance payments of the premium tax credit; redeterminations of
eligibility determinations during a benefit year; and annual
eligibility redeterminations.
(c) Improper payment rate. HHS will notify each State Exchange of
HHS' error findings decisions for that State Exchange and HHS' estimate
of that State Exchange's improper payment rate.
Sec. 155.1520 Error findings decisions.
(a) Issuance of error findings decisions. Upon completion of the
review, HHS will issue the error findings decision to the State
Exchange.
(b) Content of error findings decision. The error findings
decisions at a minimum will include:
(1) The review findings regarding any errors made by the State
Exchange.
(2) Information regarding the State Exchange's right to request a
redetermination of the error findings decision in accordance with Sec.
155.1525.
Sec. 155.1525 Redetermination of error findings decisions.
(a) Request for redetermination. A State Exchange may request a
redetermination of error findings decision within the deadline
prescribed by the annual program schedule. During the period for a
State Exchange to request a redetermination of the error findings
decision, HHS will consider a request for an extension in extreme
circumstances, which includes but is not limited to situations such as
natural disasters, interruptions in business operations such as major
system failures, or other extreme circumstances. At a minimum, the
request for redetermination must include:
(1) The error(s) for which the State Exchange is requesting a
redetermination;
(2) All data and information that supports the State Exchange's
request for a redetermination; and
(3) An explanation of how the data and information pertains to the
error(s) specified in (a)(1).
(b) Issuance of redetermination decision. The redetermination of an
error findings decision will be issued within the deadline prescribed
by the annual program schedule. A State Exchange will be notified of
any delays in the issuance in the redetermination of an error findings
decision.
(c) Content of redetermination decision. HHS' redetermination of an
error findings decision, at a minimum, will include:
(1) HHS' findings regarding the impact of the additional data and
information provided by the State Exchange on the error(s) for which
the State Exchange requested a redetermination,
(2) Information regarding the State Exchange's right to request an
appeal of the redetermination of the error findings decision in
accordance with Sec. 155.1530.
Sec. 155.1530 Appeal of redetermination decision.
(a) Request for appeal. A State Exchange may request an appeal of a
redetermination decision within the deadline prescribed by the annual
program schedule. The request for appeal must indicate the specific
error(s) identified in the redetermination decision for which the State
Exchange is requesting an appeal.
(b) On-the-record review. Additional data or information, beyond
that submitted during the redetermination request, will not be
considered in rendering the appeal decision.
(c) Issuance of appeal decision. The appeal decision will be issued
within the deadline prescribed in the annual program schedule unless
there is a delay. A State Exchange will be notified of any delays in
the issuance of the appeal decision.
(d) Content of appeal decision. HHS' appeal decision will include:
(1) The findings regarding the error(s) for which an appeal was
requested. The findings will be limited to those error(s) identified in
the request for an appeal.
(2) The final disposition of the appeal request.
[[Page 725]]
(e) Final report. Upon completion of the review and the closure of
all appeals, HHS may issue a report containing the error findings and
the estimated improper payment rate.
Sec. 155.1535 Corrective action plan.
(a) Corrective action plan. Based on a State Exchange's error rate
for a given benefit year, HHS, in its reasonable discretion, may
require the State Exchange to develop and submit a corrective action
plan to correct errors resulting in improper payments.
(b) Content of proposed corrective action plan. A State Exchange's
corrective action plan must be developed in accordance with Appendix C
to Office of Management and Budget Circular No. A-123.
(c) Implementation and evaluation of corrective action plan. A
State Exchange must develop an implementation schedule for its
corrective action plan, implement the plan in accordance with that
schedule, and regularly evaluate whether the initiatives are effective
at reducing or eliminating error causes.
(d) Failure to submit. If a State Exchange does not submit a
corrective action plan when required, HHS may take actions consistent
with Sec. 155.1540(a)(1) and (2).
Sec. 155.1540 Failure to comply.
(a) Failure to comply. If a State Exchange fails to substantially
comply with the data collection requirements or the CAP provisions
contained in this subpart, and HHS finds that such failures undermine
or prohibit HHS's efficient administration of Exchange improper payment
measurement activities, HHS may implement measures or procedures in
relation to the State Exchange that:
(1) HHS determines are appropriate to secure the State Exchange's
compliance with the data collection requirements or the CAP provisions
contained in subpart P, and to detect, prevent or reduce abuses in the
administration of advance payments of the premium tax credit under
title I of the ACA; and
(2) the Secretary has authority to implement under title I of the
Affordable Care Act or any other Federal law.
(b) [Reserved]
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
20. The authority citation for part 156 is revised to read as follows:
Authority: 42 U.S.C. 18021-18024, 18031-18032, 18041-18042,
18044, 18054, 18061, 18063, 18071, 18082, and 26 U.S.C. 36B.
0
21. Amend Sec. 156.50 by--
0
a. Removing paragraph (c)(3); and
0
b. Revising paragraphs (d)(1) introductory text, (d)(2)(i)(A) and (B),
(d)(2)(ii), (d)(2)(iii)(B), (d)(3) introductory text, (d)(4) and (6),
and (d)(7) introductory text.
The revisions read as follows:
Sec. 156.50 Financial support.
* * * * *
(d) * * *
(1) A participating issuer offering a plan through a federally-
facilitated Exchange or State Exchange on the Federal platform may
qualify for an adjustment of the federally-facilitated Exchange user
fee specified in paragraph (c)(1) of this section or the State Exchange
on the Federal platform user fee specified in paragraph (c)(2) of this
section, to the extent that the participating issuer--
* * * * *
(2) * * *
(i) * * *
(A) Identifying information for the participating issuer and each
third party administrator that received a copy of the self-
certification referenced in 26 CFR 54.9815-2713A(a)(4) or with respect
to which the participating issuer seeks an adjustment of the user fee
specified in paragraph (c)(1) or (2) of this section, as applicable,
whether or not the participating issuer was the entity that made the
payments for contraceptive services;
(B) Identifying information for each self-insured group health plan
with respect to which a copy of the self-certification referenced in 26
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by
a third party administrator and with respect to which the participating
issuer seeks an adjustment of the user fee specified in paragraph
(c)(1) or (2) of this section, as applicable; and
* * * * *
(ii) Each third party administrator that intends to seek an
adjustment on behalf of a participating issuer of the federally-
facilitated Exchange user fee or the State-based Exchange on the
Federal platform user fee based on payments for contraceptive services,
must submit to HHS a notification of such intent, in a manner specified
by HHS, by the 60th calendar day following the date on which the third
party administrator receives the applicable copy of the self-
certification referenced in 26 CFR 54.9815-2713A(a)(4) or 29 CFR
2590.715-2713A(a)(4).
(iii) * * *
(B) Identifying information for each self-insured group health plan
with respect to which a copy of the self-certification referenced in 26
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by
the third party administrator and with respect to which the
participating issuer seeks an adjustment of the user fee specified in
paragraph (c)(1) or (2) of this section, as applicable;
* * * * *
(3) If the requirements set forth in paragraph (d)(2) of this
section are met, the participating issuer will be provided a reduction
in its obligation to pay the user fee specified in paragraph (c)(1) or
(2) of this section, as applicable, equal in value to the sum of the
following:
* * * * *
(4) If the amount of the adjustment under paragraph (d)(3) of this
section is greater than the amount of the participating issuer's
obligation to pay the user fee specified in paragraph (c)(1) or (2) of
this section, as applicable, in a particular month, the participating
issuer will be provided a credit in succeeding months in the amount of
the excess.
* * * * *
(6) A participating issuer that receives an adjustment in the user
fee specified in paragraph (c)(1) or (2) of this section for a
particular calendar year must maintain for 10 years following that
year, and make available upon request to HHS, the Office of the
Inspector General, the Comptroller General, and their designees,
documentation demonstrating that it timely paid each third party
administrator with respect to which it received any such adjustment any
amount required to be paid to the third party administrator under
paragraph (d)(5) of this section.
(7) A third party administrator of a plan with respect to which an
adjustment of the user fee specified in paragraph (c)(1) or (2) of this
section is received under this section for a particular calendar year
must maintain for 10 years following that year, and make available upon
request to HHS, the Office of the Inspector General, the Comptroller
General, and their designees, all of the following documentation:
* * * * *
0
22. Amend Sec. 156.111 by--
0
a. Revising the section heading;
0
b. Revising paragraph (d) and paragraph (e) introductory text; and
0
c. Removing paragraph (f).
The revisions read as follows:
[[Page 726]]
Sec. 156.111 State selection of EHB-benchmark plan for plan years
beginning on or after January 1, 2020.
* * * * *
(d) A State must notify HHS of the selection of a new EHB-benchmark
plan by the first Wednesday in May that is 2 years before the effective
date of the new EHB-benchmark plan.
(1) If the State does not make a selection by the first Wednesday
in May that is 2 years before the effective date of the new EHB-
benchmark plan, or its benchmark plan selection does not meet the
requirements of this section and section 1302 of the ACA, the State's
EHB-benchmark plan for the applicable plan year will be that State's
EHB-benchmark plan applicable for the prior year.
(2) [Reserved]
* * * * *
(e) A State changing its EHB-benchmark plan under this section must
submit documents in a format and manner specified by HHS by the first
Wednesday in May that is 2 years before the effective date of the new
EHB-benchmark plan. These must include:
* * * * *
0
23. Amend Sec. 156.115 by revising paragraph (b)(2) to read as
follows:
Sec. 156.115 Provision of EHB.
* * * * *
(b) * * *
(2) An issuer may substitute a benefit within the same EHB
category, unless prohibited by applicable State requirements.
Substitution of benefits between EHB categories is not permitted.
* * * * *
0
24. Amend Sec. 156.125 by revising paragraph (a) to read as follows:
Sec. 156.125 Prohibition on discrimination.
(a) An issuer does not provide EHB if its benefit design, or the
implementation of its benefits design, discriminates based on an
individual's age, expected length of life, present or predicted
disability, degree of medical dependency, quality of life, or other
health conditions. A non-discriminatory benefit design that provides
EHB is one that is clinically-based, incorporates evidence-based
guidelines into coverage and programmatic decisions, and relies on
current and relevant peer-reviewed medical journal article(s), practice
guidelines, recommendations from reputable governing bodies, or similar
sources.
* * * * *
0
25. Amend Sec. 156.140 by revising paragraph (c) to read as follows:
Sec. 156.140 Levels of coverage.
* * * * *
(c) De minimis variation. (1) For plan years beginning on or after
January 1, 2018 through December 31, 2022, the allowable variation in
the AV of a health plan that does not result in a material difference
in the true dollar value of the health plan is -4 percentage points and
+2 percentage points, except if a health plan under paragraph (b)(1) of
this section (a bronze health plan) either covers and pays for at least
one major service, other than preventive services, before the
deductible or meets the requirements to be a high deductible health
plan within the meaning of section 223(c)(2) of the Internal Revenue
Code, in which case the allowable variation in AV for such plan is -4
percentage points and +5 percentage points.
(2) For plan years beginning on or after January 1, 2023, the
allowable variation in the AV of a health plan that does not result in
a material difference in the true dollar value of the health plan is -2
percentage points and +2 percentage points, except if a health plan
under paragraph (b)(1) of this section (a bronze health plan) either
covers and pays for at least one major service, other than preventive
services, before the deductible or meets the requirements to be a high
deductible health plan within the meaning of section 223(c)(2) of the
Internal Revenue Code, in which case the allowable variation in AV for
such plan is -2 percentage points and +5 percentage points.
0
26. Amend Sec. 156.200--
0
a. By revising paragraph (b)(3); and
0
b. In paragraph (e) by removing the phrase ``age, or sex'' and adding
in its place the phrase ``age, sex, sexual orientation, or gender
identity''.
The revision read as follows:
Sec. 156.200 QHP issuer participation standards.
* * * * *
(b) * * *
(3) Ensure that each QHP complies with benefit design standards, as
defined in Sec. 156.20, except that individual market silver QHPs must
have an AV of 70 percent, with a de minimis allowable AV variation of -
0 percentage points and +2 percentage points;
* * * * *
0
27. Add Sec. 156.201 to read as follows:
Sec. 156.201 Standardized options.
For plan year 2023 and subsequent plan years, a QHP issuer in a
federally-facilitated Exchange or a State-based Exchange on the Federal
platform, other than an issuer that is already required to offer
standardized options under state action taking place on or before
January 1, 2020, must offer at least one standardized QHP option,
defined at Sec. 155.20 of this subchapter, at every product network
type, as the term is described in the definition of ``product'' at
Sec. 144.103 of this subchapter, metal level, and throughout every
service area that it also offers non-standardized QHP options,
including, for silver plans, for the income-based cost-sharing
reduction plan variations, as provided for at Sec. 156.420(a), but not
for the zero and limited cost sharing plan variations, as provided for
at Sec. 156.420(b).
0
28. Amend Sec. 156.230 by--
0
a. Revising paragraphs (a)(1) through (3); and,
0
b. Removing paragraph (f).
The revisions read as follows:
Sec. 156.230 Network adequacy standards.
(a) * * *
(1) Each QHP issuer that uses a provider network must ensure that
the provider network consisting of in-network providers, and, for plans
with more than one tier of network, specifically the provider network
consisting of in-network providers in the tier for which the plan
imposes the lowest cost-sharing obligation, as available to all
enrollees, meets the following standards:
(i) Includes essential community providers in accordance with Sec.
156.235;
(ii) Maintains a network that is sufficient in number and types of
providers, including providers that specialize in mental health and
substance abuse services, to ensure that all services will be
accessible without unreasonable delay; and
(iii) Is consistent with the rules for network plans of section
2702(c) of the PHS Act.
(2)(i) Standards. For plan years beginning on or after January 1,
2023, a QHP issuer on a federally-facilitated Exchange must comply with
the requirement in paragraph (a)(1)(ii) of this section by:
(A) Meeting time and distance standards established by the
federally-facilitated Exchange. Such time and distance standards will
be developed for consistency with industry standards and published in
guidance.
(B) Meeting appointment wait time standards established by the
federally-facilitated Exchange. Such appointment wait time standards
will be developed for consistency with industry standards and published
in guidance.
(ii) Written justification. If a plan applying for QHP
certification to be offered through a federally-facilitated
[[Page 727]]
Exchanges does not satisfy the network adequacy standards described in
paragraphs (a)(2)(i)(A) and (B) of this section, the issuer must
include as part of its QHP application a justification describing how
the plan's provider network provides an adequate level of service for
enrollees and how the plan's provider network will be strengthened and
brought closer to compliance with the network adequacy standards prior
to the start of the plan year. The issuer must provide information as
requested by the FFE to support this justification.
(3) The federally-facilitated Exchange may grant an exception to
the requirements in paragraph (a)(2)(i)(A) of this section if the
Exchange determines that making such health plan available through such
Exchange is in the interests of qualified individuals in the State or
States in which such Exchange operates.
* * * * *
0
29. Amend Sec. 156.235 by revising paragraphs (a)(2)(i) and (b)(2)(i)
to read as follows:
Sec. 156.235 Essential community providers.
(a) * * *
(2) * * *
(i) The network includes as participating providers at least a
minimum percentage, as specified by HHS, of available essential
community providers in each plan's service area. Multiple providers at
a single location will count as a single essential community provider
toward both the available essential community providers in the plan's
service area and the issuer's satisfaction of the essential community
provider participation standard. For plans that use tiered networks, to
count toward the issuer's satisfaction of the essential community
provider standards, providers must be contracted within the network
tier that results in the lowest cost-sharing obligation. For plans with
two network tiers (for example, participating providers and preferred
providers), such as many PPOs, where cost sharing is lower for
preferred providers, only preferred providers will be counted towards
essential community provider standards; and
* * * * *
(b) * * *
(2 * * *
(i) The number of its providers that are located in Health
Professional Shortage Areas or five-digit zip codes in which 30 percent
or more of the population falls below 200 percent of the Federal
poverty level satisfies a minimum percentage, specified by HHS, of
available essential community providers in the plan's service area.
Multiple providers at a single location will count as a single
essential community provider toward both the available essential
community providers in the plan's service area and the issuer's
satisfaction of the essential community provider participation
standard. For plans that use tiered networks, to count toward the
issuer's satisfaction of the essential community provider standards,
providers must be contracted within the network tier that results in
the lowest cost-sharing obligation. For plans with two network tiers
(for example, participating providers and preferred providers), such as
many PPOs, where cost sharing is lower for preferred providers, only
preferred providers would be counted towards essential community
provider standards; and
* * * * *
Subpart D--Standards for Qualified Health Plan Issuers for Specific
Types of Exchanges
0
30. Revise the subpart D heading to read as set forth above.
0
31. Amend Sec. 156.340 by revising paragraphs (a) and (b)(4) and (5)
to read as follows:
Sec. 156.340 Standards for downstream and delegated entities.
(a) General requirement. Effective October 1, 2013, notwithstanding
any relationship(s) that a QHP issuer may have with delegated and
downstream entities, a QHP issuer maintains responsibility for its
compliance and the compliance of any of its delegated or downstream
entities with all applicable Federal standards related to Exchanges.
The applicable standards depend on the Exchange model type in which the
QHP is offered, as described in paragraph (a)(1) and (2) of this
section.
(1) QHP issuers participating in Exchange models that do not use
the Federal platform, including State Exchanges and State Exchange
SHOPs. QHP issuers maintain responsibility for ensuring their
downstream and delegated entities comply with the Federal standards
related to Exchanges, including the standards in of subpart C of this
part with respect to each of its QHPs on an ongoing basis, as well as
the Exchange processes, procedures, and standards in accordance with
subparts H and K of part 155 and, in the small group market, Sec. Sec.
155.705 and 155.706 of this subchapter, unless the standard is
specifically applicable to a federally-facilitated Exchange or FF-SHOP;
(2) QHP issuers participating in Exchanges that use the Federal
platform, including federally-facilitated Exchanges, FF-SHOPs, SBE-FPs,
and SBE-FP-SHOPs. QHP issuers maintain responsibility for ensuring
their downstream and delegated entities comply with Federal standards
related to Exchanges, including the standards in subpart C of part 156
with respect to each of its QHPs on an ongoing basis, as well as the
Exchange processes, procedures, and standards in accordance with
subparts H and K of part 155 of this subchapter and, in the small group
market, Sec. Sec. 155.705 and 155.706 of this subchapter if applicable
to the Exchange type in which the QHP issuer is operating. QHP issuers
are also responsible for their downstream and delegated entities'
compliance with the standards of Sec. 155.220 of this subchapter with
respect to assisting with enrollment in QHPs, and to the standards of
Sec. Sec. 156.705 and 156.715 of this subchapter for maintenance of
records and compliance reviews if applicable to the Exchange type in
which the QHP issuer is operating.
(b) * * *
(4) Specify that the delegated or downstream entity must permit
access by the Secretary and the OIG or their designees in connection
with their right to evaluate through audit, inspection, or other means,
to the delegated or downstream entity's books, contracts, computers, or
other electronic systems, including medical records and documentation,
relating to the QHP issuer's obligations in accordance with Federal
standards under paragraph (a) of this section until 10 years from the
final date of the agreement period;
(5) All agreements between issuers offering QHPs through an
Exchange and delegated or downstream entities the issuers engage to
support the issuer's activities on an Exchange must include text under
which the language stating that the relevant Exchange authority may
demand and receive the delegated or downstream entity's books,
contracts, computers, or other electronic systems, including medical
records and documentation, relating to the QHP issuer's obligations in
accordance with Federal standards under paragraph (a) of this section
until 10 years from the final date of the agreement period.
0
32. Amend Sec. 156.400 by revising the definition of ``De minimis
variation for a silver plan variation'' to read as follows:
Sec. 156.400 Definitions.
* * * * *
De minimis variation for a silver plan variation means a -0
percentage point
[[Page 728]]
and +1 percentage point allowable AV variation.
* * * * *
0
33. Amend Sec. 156.430 by revising paragraphs (b)(1), (d) introductory
text, (e) introductory text, and (e)(1) to read as follows:
Sec. 156.430 Payment for cost-sharing reductions.
* * * * *
(b) * * *
(1) When there is an appropriation to make cost-sharing reduction
payments to QHP issuers, a QHP issuer will receive periodic advance
payments from HHS to the extent permitted by the appropriation and
calculated in accordance with Sec. 155.1030(b)(3) of this subchapter.
* * * * *
(d) Cost-sharing reductions data submissions. HHS will periodically
provide a submission window for issuers to submit cost-sharing
reduction data documenting cost-sharing reduction amounts issuers paid,
as specified in paragraphs (d)(1) and (2) of this section, in a form
and manner specified by HHS in guidance, calculated in accordance with
paragraph (c) of this section. When HHS makes cost-sharing reduction
payments to QHP issuers, HHS will notify QHP issuers that the
submission of the cost-sharing data is mandatory for those issuers
having received cost-sharing reduction payments for any part of the
benefit year and voluntary for other issuers, and HHS will use the data
to reconcile advance cost-sharing reduction payments to issuers against
the actual amounts of cost-sharing reductions QHP issuers provided, as
determined by HHS based on amounts specified in paragraphs (d)(1) and
(2) of this section, as calculated in accordance with paragraph (c) of
this section. In the absence of an appropriation to make cost-sharing
reduction payments to issuers, HHS will notify QHP issuers that the
submission of the cost-sharing data is voluntary. The cost-sharing data
that must be submitted in either a voluntary or mandatory submission
includes:
* * * * *
(e) Cost-sharing reductions payments and charges. If the actual
amounts of cost-sharing reductions determined by HHS based on amounts
described in paragraphs (d)(1) and (2) of this section are--
(1) More than the amount of advance payments HHS provided, and the
QHP issuer has timely provided the data of actual amounts of cost-
sharing reductions as required under paragraph (c) of this section, if
an appropriation is available to make cost-sharing payments to QHP
issuers, HHS will make a payment to the QHP issuer for the difference;
or
* * * * *
Sec. 156.1230 [Amended]
0
34. Amend Sec. 156.1230 in paragraph (b)(2) by removing the phrase
``age, or sex'' and adding in its place the phrase ``age, sex, sexual
orientation, or gender identity''.
PART 158--ISSUER USE OF PREMIUM REVENUE: REPORTING AND REBATE
REQUIREMENTS
0
35. The authority citation for part 158 continues to read as follows:
Authority: 42 U.S.C. 300gg-18.
0
36. Amend Sec. 158.140 by revising paragraph (b)(2)(iii) to read as
follows:
Sec. 158.140 Reimbursement for clinical services provided to
enrollees.
* * * * *
(b) * * *
(2) * * *
(iii) The amount of incentive and bonus payments made to providers
that are tied to clearly defined, objectively measurable, and well-
documented clinical or quality improvement standards that apply to
providers.
* * * * *
0
37. Amend Sec. 158.150 by revising paragraph (a) to read as follows:
Sec. 158.150 Activities that improve health care quality.
(a) General requirements. The report required in Sec. 158.110 must
include expenditures directly related to activities that improve health
care quality, as such activities are described in this section.
* * * * *
0
38. Amend Sec. 158.170 by revising paragraph (b) introductory text to
read as follows:
Sec. 158.170 Allocation of expenses.
* * * * *
(b) Description of the methods used to allocate expenses. The
report required in Sec. 158.110 must include a detailed description of
the methods used to allocate expenses, including incurred claims,
quality improvement expenses, Federal and State taxes and licensing or
regulatory fees, and other non-claims costs, to each health insurance
market in each State. A detailed description of each expense element
must be provided, including how each specific expense meets the
criteria for the type of expense in which it is categorized, as well as
the method by which it was aggregated.
* * * * *
Dated: December 23, 2021.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2021-28317 Filed 12-28-21; 4:15 pm]
BILLING CODE 4120-01-P
